50/50 custody is a legal arrangement not recognized by the IRS for determining who the custodial parent is. The IRS rules say that the custodial parent is the parent who the child spent more than half the nights of the year with. In every year but leap year, there are an odd number of nights during the year so the parent who had the child one night or more than the other is the custodial parent. You are correct that a tie breaker when the number of nights are the same is whoever has the higher AGI.
If she is the custodial parent, she can claim the child for qualifying child benefits and release the dependency to the other parent using form 8332. If she also meets all the requirements to file as Head of Household, she can use that filing status. Here are the requirements:
1. You are not married or “considered unmarried” on the last day of the year. You are considered unmarried if you lived apart from your spouse the entire last 6 months of the year.
2. If "considered unmarried" you file a separate return from your spouse.
3. You paid more than half the cost of keeping up your home for the year.
4. You have a qualifying child (whether or not you claim the dependency exemption) or you claim a dependency exemption for a “qualifying person” who is related to you and who lived with you in the home for more than half the year. An exception is a parent does not have to live with you to be a qualifying person.
No. Only one of you can claim HoH and that is her.
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: http://www.irs.gov/publications/p17/ch03.html#en_US_2014_publink1000170897 Scroll down to "Children of divorced or separated parents (or parents who live apart)"
I found this on the IRS website. It seems to contradict you take on using the HOH filing status?
You didn't post what you found from the IRS. If there is only one child who can be claimed as a qualifying child, the only parent who can file as Head of Household is the parent who the child lived with more than half the year. If there are two children and one lives with one parent more than half the year and the other lives with the other parent more than half the year, then each parent would have a qualifying child and might be able to file as Head of Household.
Sorry to be a pain, but I am sure you can understand how confusing this issue is. So I thought I would give more details:
In this case, there is 1 child. Parents divorced in 2010. They have agreed to split custody with the child 50/50. They have been alternating taking the child as a dependent each year; on the year the other does not take the child, they were filing as Single. The Spouse has since remarried so I assume he is now filing as either MFJ or MFS. I did TP return for 2018; she took the dependent. I am now doing her 2019 return and trying to determine if she can file as HOH. I believe she is the Custodial Parent because of her salary. So my take is that she can take HOH and send an 8332 for to the Spouse, and send one separately to the IRS. My source for this is the Pub 504, pages 22 - 24, Children of Divorced or Separated Parents.
50/50 custody is a legal arrangement not recognized by the IRS for determining who the custodial parent is. The IRS rules say that the custodial parent is the parent who the child spent more than half the nights of the year with. In every year but leap year, there are an odd number of nights during the year so the parent who had the child one night or more than the other is the custodial parent. You are correct that a tie breaker when the number of nights are the same is whoever has the higher AGI.
If she is the custodial parent, she can claim the child for qualifying child benefits and release the dependency to the other parent using form 8332. If she also meets all the requirements to file as Head of Household, she can use that filing status. Here are the requirements:
1. You are not married or “considered unmarried” on the last day of the year. You are considered unmarried if you lived apart from your spouse the entire last 6 months of the year.
2. If "considered unmarried" you file a separate return from your spouse.
3. You paid more than half the cost of keeping up your home for the year.
4. You have a qualifying child (whether or not you claim the dependency exemption) or you claim a dependency exemption for a “qualifying person” who is related to you and who lived with you in the home for more than half the year. An exception is a parent does not have to live with you to be a qualifying person.
So I have a similar complex situation I am struggling with...
Divorce agreement is 50/50. Agreed to go every other year on exemption for dependent. I had it exemption for 2019...mother gets it this year. So I am signing dependent exemption over to her with form 8332 waiver. I think I qualify for hoh since my AGI is higher. Can mother also claim hoh? She is otherwise single.
No, only the custodial parent can claim head of household. You are correct. If the nights the child spend with both parents are the same, the tiebreaker is the higher AGI. You would be the custodial parent.
Of note assuming the child is age 16 or under and qualifies for the stimulus payments, the child's mother should also get those payments on her 2020 tax return since she is claiming the child this year. That is true even though you may have received stimulus payments for the child based on the 2019 returns.
Do I have to pay back that portion of my stimulus relief then if my ex-wife gets it? (We actually split what I got for our child's portion)
IRS FAQ Do I need to pay back all or some of the payment? states:
A3. No, there is no provision in the law that would require individuals who qualify for a Payment based on their 2018 or 2019 tax returns, to pay back all or part of the payment, if based on the information reported on their 2020 tax returns, they no longer qualify for that amount or would qualify for a lesser amount.
For example, you received $500 for your child who, based on your 2018 or 2019 tax return, met the qualifying child requirements. That child turned 17 in 2020 and no longer meets the qualifying child requirements. You will not be required to pay back the $500.
Or, for example, you received $500 for your child whom you claimed on your 2018 or 2019 tax return. You do not claim the child on your 2020 tax return because the child’s other parent claims the child. You will not be required to pay back the $500 even if the child’s other parent claims $500 for the same child on his or her 2020 tax return.
Keep Notice 1444, Your Economic Impact Payment, with your 2020 tax records. The IRS will mail Notice 1444 to your last known address within 15 days after the Payment is made.
It may be possible for you both to claim Head of Household filing status if you both are unmarried and you both have children from previous relationships. However, it would be difficult to demonstrate that you both are paying more than half of the costs of maintaining a home for the same child.
You may qualify for Head of Household filing status if you:
So I have a doozy of a question on this. My ex and I are legally separated as of October 29th 2020. So we are both classified as "single" for HOH rules. Her and my stepson moved out on August 22, 2020. She bought a new home and moved in on October 1st, 2020. Her son lived with me and her for ~8 months, but her only for 3 months. I paid all the household costs for the first 8 months we lived together, she paid all the household costs for 3 months in her new home. I agree she is the custodial parent, but did not meet the 6 month requirement for support, I did. I also spent the most on the stepchild living expenses as he didn't work and was a 22 year old college student. So we are legally separated, I paid for the household for 8 months, and my stepson lived with me (and her) for that 8 month period. My AGI is nearly double hers as well. Who files HOH and remember the 50% support for 6 months? I met that, she only had 3 months. I guess the real question is what constitutes a "home" and since 6 months matter for the dependent it should matter for the "home" as well. To me that is where the most nights are spent, which again would be my home. I get so many conflicting stories from CPA's on this. One says we both can, one says she can as the custodial parent, and one says I can and she cannot. So which is it?
On top of this, she already filed as HOH so when I do my taxes and enter my stepsons SSN it gets rejected. My attorney and CPA are looking into it but I want to make sure. Not interested in peoples thoughts, but am interested in the rules and how to apply them.
There is no 6-month requirement for support. To claim your child, the child cannot have provided more than half of their own support. The custodial parent can take all of the credits, you can't split them - other than in one exception for parents living apart, see below. The other problem you have is that the child is not your child, he is her child. And she qualifies to claim her child as a dependent, which means you now do NOT qualify to claim the child (because the child can be claimed by someone else, see first link above). You can't claim head of household unless you have a qualifying person. She may not be able to claim Head of Household if she did not provide upkeep for the home where the child lived, so it sounds like neither of you qualifies for the head of household status. Your attorney and CPA should be able to provide you clarification, but for tax purposes, you both technically qualify as custodial parents since you all lived together for more than 6 months. But now that you are legally separated, she can claim her child. So, unless you have another dependent to qualify you for the HoH status, you can't use that filing status.
The exception to the general rule >> The custodial parent is the one who can claim all of the credits and head of the household status (if they otherwise qualify to do so). The custodial parent can give the other parent a signed form 8332 to give the other parent the right to claim the dependency and child tax credit. The custodial parent retains the right to claim EIC and child care credit as well as file as head of household if otherwise qualified. @ColinW1972
@ColinW1972 wrote:
On top of this, she already filed as HOH so when I do my taxes and enter my stepsons SSN it gets rejected. My attorney and CPA are looking into it but I want to make sure. Not interested in peoples thoughts, but am interested in the rules and how to apply them.
Here are all the IRS rules with 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.
@ColinW1972 wrote:
So I have a doozy of a question on this. My ex and I are legally separated as of October 29th 2020. So we are both classified as "single" for HOH rules.
BTW: Legally separated for tax purposes must meet these conditions:
Most states do not recognize legal separation and a "separate maintenance decree." is about the same thing as a divorce decree with alimony.
https://www.irs.gov/pub/irs-pdf/p17.pdf page 21
Legally separated from your spouse under a divorce or separate maintenance decree.
State law governs whether you are married or legally separated under a divorce or separate maintenance decree.Divorced person
We meet that. We have a separation decree in South Carolina and I made sure we met the requirement with my attorney, and several CPA's. We are solid on the "not married" part.
@ColinW1972 wrote:
On top of this, she already filed as HOH so when I do my taxes and enter my stepsons SSN it gets rejected. My attorney and CPA are looking into it but I want to make sure. Not interested in peoples thoughts, but am interested in the rules and how to apply them.
If the child physically lived with you longer than with the other parent but more than 183 nights in 2020, then according to the rules I posted above, you would be the custodial parent.
BTW: a stepson is treated as yiur child for tax purposes and that relationship does not end with divorce of separation.
If you or a dependent that you are entitled to claim has already been claimed by another taxpayer, your e-filed return will reject since the SSN has already been used (either intentionally or in error such as a mistyped SSN).
Your only recourse is to file a correct tax return, claiming what you are entitled to claim, then print and mail the return.
The IRS will process both returns and pay any refunds. Shortly (within a year) the IRS will mail letters to both taxpayers asking if their tax return was filed in error and suggesting that they amend if they improperly claimed.
If neither taxpayer amends, the IRS will send a second letter asking for each taxpayers proof that they are entitled to the claim.
The IRS will evaluate each taxpayers claim and award the credit to one taxpayer, the other will have to payback any refund received plus interest and possible penalties.
Do not ignore the letters or you will loose.
My lawyer asked for form 8332 to be filled out by her...but she is refusing. I guess we go to court now. What about tie breaker rules. We "both don't qualify (me for the form and her for the finances) so wouldn't that fall to the higher AGI?
There are two different rules. The "separated parents" custody rules I posted above, (as stated at the top) ONLY apply if the parents were separated at all times during the last 6 months of 2020. If you lived together at any time during the last 6 months then none of those rules, or the 8332 form, apply.
If you BOTH lived with the child more then 183 days in 2020 then the rules below apply. The tie breaking "highest AGI" only apply if the child lived with both parents the exact same number of days (see below).
Qualifying Child of More Than One Person
[Quote from IRS Publication 501]
Sometimes, a child meets the relationship, age, residency, support, and joint return tests to be a qualifying child of more than one person. Although the child is a qualifying child of each of these persons, only one person can actually treat the child as a qualifying child to take all of the following tax benefits (provided the person is eligible for each benefit).
1. The child tax credit or credit for other dependents.
2. Head of household filing status.
3. The credit for child and dependent care expenses.
4. The exclusion from income for dependent care benefits.
5. The earned income credit.
The other person can’t take any of these benefits based on this qualifying child. In other words, you and the other person can’t agree to divide these tax benefits between you.
Tiebreaker rules.
To determine which person can treat the child as a qualifying child to claim these five tax benefits, the following tiebreaker rules apply.
1 - If only one of the persons is the child's parent, the child is treated as the qualifying child of the parent.
2 - If the parents file a joint return together and can claim the child as a qualifying child, the child is treated as the qualifying child of the parents.
3 - If the parents don't file a joint return together but both parents claim the child as a qualifying child, the IRS will treat the child as the qualifying child of the parent with whom the child lived for the longer period of time during the year. If the child lived with each parent for the same amount of time, the IRS will treat the child as the qualifying child of the parent who had the higher adjusted gross income (AGI) for the year.
4- If no parent can claim the child as a qualifying child, the child is treated as the qualifying child of the person who had the highest AGI for the year.
5 - If a parent can claim the child as a qualifying child but no parent does so claim the child, the child is treated as the qualifying child of the person who had the highest AGI for the year, but only if that person's AGI is higher than the highest AGI of any of the child's parents who can claim the child.
Subject to these tiebreaker rules, you and the other person may be able to choose which of you claims the child as a qualifying child.
[end quote]
https://www.irs.gov/publications/p501#en_US_2020_publink1000220917https://www.irs.gov/publications/p501#en_US_2018_publink1000220917
So if the qualifying child lived under my HoH approving rules for more of the year, then he would be my qualifying dependent. Am I getting that right? Remember 8 months with me paying for him versus 3 months with her paying the bills.
@ColinW1972 wrote:
So if the qualifying child lived under my HoH approving rules for more of the year, then he would be my qualifying dependent. Am I getting that right? Remember 8 months with me paying for him versus 3 months with her paying the bills.
Again those are different rules. First the child must be your dependent under the rules above, The you apply the HOH rules.
(All of the rules you need are in the IRS Pub 501.)
Here is the long version with all the HOH rules.
Head of Household is for UNMARRIED taxpayers with a related dependent or married and have not lived with their spouse at anytime during the last 6 months of the tax year AND has a child, stepchild or foster child that can be a dependent.
=======================================
You may be able to file as head of household if you meet all the following requirements.
1. You are unmarried or “considered unmarried” on the last day of the year.
2. You paid more than half the cost of keeping up a home for the year.
3. A “qualifying person” lived with you in the home for more than half the year (except for temporary absences such as school) - a parent does not have to live with you to be a qualifying person.
4. If the qualifying person is your qualifying relative, their gross income must have been less than $4,300 (do not include non taxable Social Security) and you provided more than 1/2 of their support
5. You must be able to claim the dependent for the qualifying person except in the case of divorced or separated parents (that lived apart) and the noncustodial parent is claiming the dependent.
A Qualifying person is either:
A qualifying child or a qualifying closely related relative and meets certain other requirements, however if you are considered unmarried it can only be your child, stepchild, or foster child.
See IRS Publication 501 for more information about who is a qualifying person and a worksheet to determine the cost of keeping up a home.
See IRS Pub 501 for more information
https://www.irs.gov/publications/p501#en_US_2020_publink1000220779
Yup....meet all those no issue. This is where it gets confusing to me. I meet all that but my ex doesn't. I just want to file HoH and she can claim him as a dependent..She should as she is the custodial parent in my opinion. But realistically I qualify as his as his custodial parent anyway. I was just trying to be fair with his mother.
@ColinW1972 wrote:
Yup....meet all those no issue. This is where it gets confusing to me. I meet all that but my ex doesn't. I just want to file HoH and she can claim him as a dependent..She should as she is the custodial parent in my opinion. But realistically I qualify as his as his custodial parent anyway. I was just trying to be fair with his mother.
Re-read the above. If you BOTH qualify to claim a dependent then ONLY the parent that meets the rules can do so.
You can always share the refund with the other parent afterwords if you choose to do so. Tax law does not take sides.