Unusual eitc situation for filing

[Vaporextev]

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[Hal_Al]

If they are legally married, he can claim the children.  For tax purposes, a stepchild is the same as a biological child.  They will most likely file a joint return, so she will be claiming them too.  She does not need income, on a joint return, if her spouse has income.

The only thing that matters is where the children lived the most time. Everything else (AGI, child support order, amount of support provided, the fact that you were not married) is not relevant.  If you are not the custodial parent, you will need form 8332 from her to claim them. The IRS goes by physical custody, not legal custody. There is no such thing as  "Equal nights and days through the year" (except maybe in a leap year and that has other consequences).  If you both try to claim the kids, it will come down to proving to the IRS that you had physical custody.  You don't try to provide proof at tax filing time, that comes later, after the IRS sends out the letters. 

This may be helpful in your negotiations with the ex:

 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 (with form 8332); the custodial parent is still allowed to claim the same child for Earned Income Credit, Head of Household filing status (not applicable if she is married), 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.

[Vaporextev]

Right. And understood. I didn’t want to go too much into detail on the situation on the legal standpoint as I didn’t know if it was more or less relevant with it as we have our own agreement on claiming them that was explained awhile back between a mediation. But it does take a lot of questions out of the equation, I just want this to go as smooth as possible this year as last year it was a headache. 

more or less the reason for this is because I’m ready to file and questions came up with it. 
And the big one I keep seeing that pertains to my situation is there is multiple people who is eligible to claim dependents, either it’s her alone, her husband with multiple dependents or himself with shared 2 ( I’m not 100% they are married just going off word of mouth) , or myself and that it’s going off the AGI numbers and I’m 100% mine is higher. And that one is still on the fence. Is it still based off multiple eligibility? 

[Hal_Al]

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) or if it's spelled out in a pre 2009 divorce decree.

Even if you have your own agreement on claiming them, the non-custodial parent  must still get form 8332 from the custodial parent.

For tax purposes, there is no such thing as joint custody, regardless of what your legal agreement says. The requirement, to be custodial parent, is that the child live with you MORE than 50% of the time. One of you has to be the custodial parent and the other the non-custodial parent. The IRS goes by physical custody, not legal custody. 

Yes, the IRS expects you to count the numbers of nights the child sleeps at each parent's home. It is allowed  for you to arrange the children's schedules so that one child spends more than half the year with the father while the other spends more than half with the mother. Then you are each the custodial parent of one child.

It is allowed  for you to arrange the children's schedules so that the child spends more than half the year with the father one year and more than half with the mother  the next year so that you are each the custodial parent in the year you claim the child, so that you can claim full benefits.