Hello, I am wondering who has the right to claim my two children as dependents in my particular situation. I have 2 children and have been a single mom for 4 years now. Since 2018 filing year, my ex and I have each claimed one child. However I am wondering if I have the right to claim them both because they are with me much more (80%) of the time, and I provide more for their financial needs.
I appreciate any insight into this. Thanks!
Here are all the rules.
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.
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
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.
The parent who has actual physical custody more than half the nights of the year is the only parent allowed to claim the children as dependents, regardless of any court order or "50/50" custody. The IRS is governed by federal law, which is superior to state law and state courts, and the IRS requires you count the actual number of nights.
The non-custodial parent can only claim a child if the custodial parent gives them a signed form 8332 dependent release, and even with that form, the non-custodial parent can claim the child tax credit but not the dependent care credit, EIC or head of household status. Those tax benefits stay with the custodial parent and can't be waived, shared or transferred.
It seems likely that your ex claimed a child incorrectly if you have not been giving them a form 8332 (they would have to have claimed that the child lived with them), and you may have been denying yourself tax benefits if you paid for day care so you could work, or if you qualify for EIC. You may want to discuss filing amended returns for 2018 through 2020 if you have missed tax benefits. If you file an amended return to change the status of child #2 to allow you to claim more EIC or dependent care credit, that may require your ex to file an amended return to remove those claims.
@krystaljean20 said "Since 2018 filing year, my ex and I have each claimed one child".
You are allowed to agree to do that. But, your ex is not allowed to claim "full" tax benefits, sine the child did not live with him for more than half the year. In particular 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 agreed to allowed him to claim the dependency and child tax credit. You can claim those items, even though the ex is claiming the dependent.
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 a divorce decree, dated after 2008, gives the non-custodial parent the right to claim the child, he must still get form 8332 from the custodial parent. A properly worded decree should require her to provide that form. https://www.irs.gov/pub/irs-pdf/f8332.pdf