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jlynch11986
New Member

If divorced parents share 50/50 custody of a child and alternate claiming the child on their taxes can the parent that is not claiming the child still claim their portion of childcare expenses?

 
2 Replies
Opus 17
Level 15

If divorced parents share 50/50 custody of a child and alternate claiming the child on their taxes can the parent that is not claiming the child still claim their portion of childcare expenses?

Sometimes, if you file correctly.  Let me go over the rules first, because not everyone understands them.

 

The IRS doesn’t care about and is not influenced by your custody order.  Under IRS rules and federal tax law, the only parent who has the absolute right to claim a child as a dependent is the parent where the child lives more than half the nights of the year. This is the “custodial parent“ in IRS language and has nothing to do with any custody order. There is usually no such thing as 50-50 custody because in most years, there are an odd number of nights and one parent must have custody more nights than the other parent.  You may have to actually count the nights, if it is close.  Because 2020 was a leap year, it is possible that a child may have lived in each parent's home 183 nights, making it exactly equal.  That will throw a big monkey wrench into the works.  (Will discuss later.)

 

If you are the parent with custody more than half the nights of the year, you have the absolute right to claim your child as a dependent. If you decide to release the dependent claim to the other parent, you must give the other parent a signed form 8332 dependent release.  In TurboTax, you would indicate that

  • the child lived with you more than half the year
  • but that you are releasing the dependent with a signed form 8332.

 

TurboTax will still allow the child to qualify you for head of household, EIC, or the dependent care credit, because these tax benefits always stay with the parent who has custody more than half the year and can never be waived, transferred, or shared.

 

The other parent would indicate in their tax program that they had custody less than half the year and they are claiming the child because they received a form 8332.  The other parent will qualify for the $2000 child tax credit but no other dependent benefits. The other parent will be required to mail the original signed form 8332 to the IRS within three days after e-filing the rest of their tax return.

 

If you have not previously been using form 8332 and filing according to these rules, then you have been reporting to the IRS that the child lived more than half the year with whomever claimed him.  This is improper (unless your living arrangements really did change from year to year), and denies the parent with custody more than half the nights of the year with certain tax benefits. 

 

So the bottom line:

The parent who has custody more than half the nights of the year always qualifies to use the child to claim head of household status and the dependent care credit.  The parent who has the child less than half the nights of the year never qualifies for these benefits, even if they pay childcare expenses, and even if the claim the child as a dependent.

 

And, if the parent who had custody less than half the nights of the year is the one who is supposed to claim the child as a dependent this year, they can only do that with a signed form 8332 from the other parent. 

 

Finally, if you shared custody exactly equally in 2020 because it was a leap year (183 nights each), then it is the parent with the higher income who gets to claim the child as a dependent, and the parent with the lower income can only claim the child if the other parent gives them a form 8332.  And NO ONE gets to claim head of household, EIC or the childcare expense credit, because the law says the child must live with you more than half the year, and exactly half is not more than half

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
npierson7
Level 1

If divorced parents share 50/50 custody of a child and alternate claiming the child on their taxes can the parent that is not claiming the child still claim their portion of childcare expenses?

Even if you have 50/50 custody, for tax purposes only one parent can claim the expenses on their tax return. Custodial parent could be the one who had custody for more than 1/2 of the year and can claim the child as a dependent, child care expenses, earned income tax credit and, if eligible, Head of Household. The custodial parent can transfer the exemption to the non-custodial parent by providing them with a signed copy of Form 8332.

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