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Familyof09
New Member

Tax credits

Should I opt out the tax credit if me and the father signed a agreement that he files one child I file the other next year 

3 Replies
Opus 17
Level 15

Tax credits

If you are planning to claim fewer dependents on your 2021 tax return than you claimed on your 2020 tax return, you should probably try to at least partially opt out.  (I don't know if the IRS portal can allow you to unenroll one child but keep the other or if you have to completely unenroll.) 

 

You would see a significantly reduced refund or even owe taxes if you received advance payments for two children but only claim one.

 

https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
Critter-3
Level 15

Tax credits

The IRS doesn't care if you "signed an agreement" for who is claiming which child ... the IRS has specific rules on  unmarried parents who don't live together but have children in common.  

 

 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 exemption 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 IRS goes by physical custody, not legal custody, for who is the custodial parent.  Furthermore, 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. 

Opus 17
Level 15

Tax credits


@Critter-3 wrote:

The IRS doesn't care if you "signed an agreement" for who is claiming which child ... the IRS has specific rules on  unmarried parents who don't live together but have children in common.  

 

 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 exemption 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 IRS goes by physical custody, not legal custody, for who is the custodial parent.  Furthermore, 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. 


That's not entirely true, it depends on what was signed.  It is certainly true that if the taxpayer and their ex agree to claim the child dependents in a certain way, they musts follow the IRS rules in addition to whatever agreement they personally have. 

 

The bottom line for this taxpayer is they may need to unenroll from the advance credit payment if they are planning to claim fewer dependents in 2021 than 2020. 

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

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