If I claim 1 child and my ex claims 1 child, do I still list both kids on my taxes?

[Kkf10992]

I did list both kids but only claimed 1, and now when my ex tries to claim the 1 child, it gets rejected.

[macuser_22]

Only the custodial parent where the child lived the majority of the year can claim the EIC, child care credit and Head of household, of otherwise qualified.   The pare that did not live with the child can never claim those.

You tax return will reject if your ex claimed a credit that he/she was  not entitled to claim.

Your remedy is to paper file claiming what you are entitled to claim and the IRS will sort it out.

You should enter the dependent this way.

If you are the custodial parent where the child physically lived for more than half the year (183 nights) then:

When you enter the dependent, you say that he/she is "Your child" (not you and your spouse if remarried),
he/she lived with you the whole year,
“no” the child did not pay more than half of his/her own support,
"yes", you have a custody agreement,
and "yes", the other parent is claiming this year.  

That will give you the EIC, Child Care Credit and Head of Household filing status if you otherwise qualify.

The child would be listed as "non-dependent EIC & Dependent Care only".

The other (non-custodial) parent can claim the child’s exemption and child tax credit only and needs a signed 8332 form to do so.

Here are the full rules with IRS references:

Custodial Parent
These are a paraphrase of the IRS rules for divorced or separated parents that live apart.

[Note: Unless the parents have been separated at all times during the last 6 months of the year, these rules do not apply.]

See “Children of divorced or separated parents or parents who live apart” in IRS Pub 501 for full information.

https://www.irs.gov/publications/p501#en_US_2018_publink1000220904

This assumes that the child is under age 18 (in most states).  Once the child becomes an adult (Emancipated child), custody becomes mute and these rules no longer apply.(See examples 5 & 6 in Pub 501 for more information)

There is no such thing in the Federal tax law as 50/50, split, or joint custody. The IRS only recognizes physical custody (which parent the child lived with the greater part, but over half, of the tax year. That parent is the custodial parent; the other parent is the noncustodial parent.)

Who can claim the exemption and credits depends on who is the custodial parent. (By the IRS definition of custodial parent for tax purposes - this is not the same as the legal custody that a court might grant.).

The test that the IRS uses to determine the custodial parent is where the child lived for more than 1/2 (or greater part) of the year. The IRS will go so far as to require counting the nights spend in each household - that person is the custodial parent for tax purposes (if exactly equal and more than 183 days - The custodial parent is the parent with the highest AGI, if less than 183 days then neither parent has custody so the child cannot be claimed by either parent). And yes they are that picky.

See Custodial parent and noncustodial parent  in Pub 501

https://www.irs.gov/publications/p501#en_US_2018_publink1000220906

Only the Custodial parent can claim: (Child would be listed as non-dependent EIC & CC only)
-Head of Household
-The Earned Income Credit
-The Child and Dependent Care Credit
-The Health Coverage Tax Credit

The non custodial parent can only claim: (Child would be listed as dependent)
- The child as a dependent
- The Child Tax Credit or credit for other dependents

But only if specifically specified in a pre-2009 divorce decree, separation agreement or the custodial spouse releases the exemption with a signed 8332 form - after 2009 the IRS only accepts a signed 8332 form that must be attached to the non-custodial parents tax return.

Note. If you are the non-custodial parent filing your return electronically, you must file Form 8332 with Form 8453, (U.S. Individual Income Tax Transmittal) for an IRS e-file Return. See Form 8453 and its instructions for more details. This must be done within 3 days of your e-filed return being accepted by the IRS.

This does NOT mean that the custodial parent can ignore any Decree or court order allowing the non-custodial parent to claim the exemption - they can be required to issue the 8332 form. They could be required by the court to do so or be in contempt.

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Post-1984 and pre-2009 divorce decree or separation agreement. If the divorce decree or separation agreement went into effect after 1984 and before 2009, the noncustodial parent may be able to attach certain pages from the decree or agreement instead of Form 8332. The decree or agreement must state all three of the following.

1. The noncustodial parent can claim the child as a dependent without regard to any condition, such as payment of support.
2. The custodial parent will not claim the child as a dependent for the year.
3.The years for which the noncustodial parent, rather than the custodial parent, can claim the child as a dependent.

The noncustodial parent must attach all of the following pages of the decree or agreement to his or her tax return.

* The cover page (write the other parent's social security number on this page).
* The pages that include all of the information identified in items (1) through (3) above.
* The signature page with the other parent's signature and the date of the agreement.

Post-2008 divorce decree or separation agreement.   The noncustodial parent cannot attach pages from the decree or agreement instead of Form 8332 if the decree or agreement went into effect after 2008. The custodial parent must sign either Form 8332 or a similar statement whose only purpose is to release the custodial parent's claim to an exemption for a child, and the noncustodial parent must attach a copy to his or her return. The form or statement must release the custodial parent's claim to the child without any conditions. For example, the release must not depend on the noncustodial parent paying support.

Form 8332 rules for non-custodial parent:
Attach this form or similar statement to your tax return for each year you claim the exemption for your child. You can claim the exemption only if the other dependency tests in your tax return instruction booklet are met.

Note. If you are filing your return electronically, you must file Form 8332 with Form 8453, (U.S. Individual Income Tax Transmittal for an IRS e-file Return). See Form 8453 and its instructions for more details.

This must be done within 3 days of your e-filed return being accepted by the IRS.
http://www.irs.gov/pub/irs-pdf/f8453.pdf

[Opus 17]

Where did the children live more than half the nights of the year?

Only the parent where the children lived more than half the nights of the year can automatically claim the children as dependents. (This is the custodial parent, and the IRS only follows where the child actually physically lived, and does not follow court custody orders if the order is different from where the child lived.)  The non-custodial parent can only claim a child if the custodial parent signs a waiver.  Even if the custodial parent signs a waiver, the non-custodial parent can only claim the child tax credit.  The custodial parent only can use the child to qualify for head of household, the dependent care credit, and EIC.  Those benefits can never be waived, released or transferred to the non-custodial parent.

The custodial parent should list both children and indicate that they lived with the parent more than half the year (in turbotax, select "7 months" or longer).  If not claiming one of the children, the custodial parents says "yes" to "I will sign a release and allow the other parent to claim this child."  You must then sign the release form and give it to the other parent.

Then, the non-custodial parent will list the child and say the child lived with them less than half the year (choose "6 months" or less).  The program will ask, "will you get a signed release form?"  Answer yes.  The non-custodial parent will claim the child tax credit but not EIC or dependent care benefits or head of household.  After the non-custodial parent e-files, they must mail the signed release form given to them by the other parent to the IRS along with a cover page that Turbotax will tell them to print out.

Your situation is a symptom that someone did something wrong.

Either, you incorrectly claimed both children when you should have claimed one and signed a waiver for the other, or your ex is incorrectly trying to claim more benefits than allowed for a child who did not live with them, by claiming the child did live with them.

If your ex is the non-custodial parent, they need to delete the child and start over and answer the residency questions more carefully, and you need to give them the release form.  Then they should be able to e-file.  https://www.irs.gov/pub/irs-pdf/f8332.pdf

If your ex is the custodial parent and is allowing you to claim a child, then your ex should list both children, answer "more than half the year" to the residency questions, and give you a signed release form for the child you will claim.  They will be blocked from e-filing (since you already filed) and will have to file by mail.  Then you will need to file an amended tax return to remove the children and only claim the child that you have a release form for, and you will need to change your answers to the residency questions to indicate less than half the year. 

[Jbrown6802]

We do not have a court order paperwork. Only thing we have is a notarized piece of paper stating that the non custodial parent claims one child for 2 years. Only reason I signed this was because he refused to sign to say I had primary physical custody even though the children live with me. My question is, do I still have to let him claim one child on taxes even though there is a notarized paper and it's not court ordered? Children both live with me. He argues constantly that he should claim one because theres a cap on how many kids you can claim, I'll be claiming 4 in total. He says he should be able to claim one because of the cap.

[Hal_Al]

@Jbrown6802 

The simple answer to your question is: you do not have to let him claim any kids.  It's all voluntary on your part, if you want to.

Neither a court order or notarized piece of paper has any standing with the IRS. They go by their own rules, which essentially say the custodial parent has first priority on claiming the children on her taxes; regardless of the amount of support provided by the non-custodial parent. The IRS goes by physical custody, not legal custody. The non-custodial parent can only claim the child as a dependent if the custodial parent gives permission (on form 8332).  If he wants to enforce the "notarized piece of paper", he'll have to sue you, in family court.

"He argues constantly that he should claim one because there's a cap on how many kids you can claim".  There's a grain (or 2) of truth in that.  The Earned income credit (EIC)* is capped at three kids. BUT, the non custodial parent is not allowed EIC for kids, even when he gets a form 8332 to claim one as a dependent.

There is no limit on the number of kids that can be claimed for the child tax credit, but there is a mathematical limit on the  amount of the child tax credit.  So, depending on your income, you may not be getting anything** for the 4th kid and less than what he could get for the 3rd kid.  You should do the math and see if the family would come out better releasing one or two kids to him.

*There is a special rule in the case of divorced & separated (including never married) parents. When the non-custodial parent is claiming the child as a dependent/exemption/child tax credit; the custodial parent is still allowed to claim the same child for Earned Income Credit, Head of Household filing status, and day care credit. This "splitting of the child" is not available to parents who lived together at any time during the last 6 months of the year; then only one of you can claim the child for any tax reasons. The tax benefits may not be split in any other manner.
Note in particular that the non-custodial parent can never claim the Earned Income Credit, Head of Household filing status or the day care credit, based on that child, even when the custodial parent has released the dependency to him.

 So, it's good idea to let the other parent know that you will be claiming those items, as many first time divorced parents are not aware of this rule and may try to claim those items, which will cause the IRS to send out letters.

Ref: https://www.irs.gov/publications/p17#en_US_2017_publink1000170897

Scroll down to "Children of divorced or separated parents (or parents who live apart)"

**.  The child tax credit  (CTC) is  limited to your tax liability. The CTC is a non-refundable credit and can only reduce your income tax to 0, It can not help you beyond eliminating your tax liability. But, if you have more than $2500 of earned income, some or all of it is usually given back to you thru the "Additional Child tax credit". That is, part of the CTC may be on line 18b of form 1040 (2019 version) instead of line 13a (lines 17 and 12 in 2018).   The  ACTC is calculated on form 8812 and  is basically 15% of your earned income over $2500. The ACTC is a maximum of $1400 per child (not $2000).

[Opus 17]

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@Jbrown6802 wrote:

We do not have a court order paperwork. Only thing we have is a notarized piece of paper stating that the non custodial parent claims one child for 2 years. Only reason I signed this was because he refused to sign to say I had primary physical custody even though the children live with me. My question is, do I still have to let him claim one child on taxes even though there is a notarized paper and it's not court ordered? Children both live with me. He argues constantly that he should claim one because theres a cap on how many kids you can claim, I'll be claiming 4 in total. He says he should be able to claim one because of the cap.

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There is nothing for him to sign that says you had custody more than half the nights of the year.  If you have custody, you are entitled to claim the children.  If both of you claim the children, the IRS will investigate, but what you need is proof the children lived with you, you don't need permission from him.  Proof could be photos, social media posts, and other documents that show where the children spend most of their time.  Most especially you should be saving letters from outside authorities that are sent to you or the kids at your home; things like letters from schools, report cards, school bus pickup schedules, letters from doctors and dentists about appointments, and so on.  Save these kinds of letters and their envelopes to show the IRS the children lived in your home.  

There is no "cap" on the number of children you can claim as dependents.  There is a cap on EIC only, where claiming more than three children gets you the same EIC as 3 children.  But if the children don't live with the other parent, he doesn't legally qualify to use them for EIC; even if you agreed to share, it would be tax fraud. 

The IRS can't order you to release the dependent to the other parent.  Only a family court could do that.  

[macuser_22]

As Opus 17 says, the "cap" in on the EIC, but as I posted above, the parent that does not physically live with the child can NEVER claim the EIC anyway.    The MOST that parent can claim if you release the dependent, is the child tax credit - nothing more.   Both the EIC and child care credit (for children under age 13), require that the child physically lived with the parent more then half the year.