Child Tax Credit vs Dependent w/ Split Custody

[Inkstylus]

This is my first time filing jointly, and I am trying to claim the Child Tax Credit.

My wife and I married last year, and she has a child from a previous marriage. During her divorce agreement the judge decreed that her exhusband could declare their child as a dependent on his taxes each year. She could claim the Child Tax Credit each year. 

I am trying to figure out how to comply with the court order and claim the Child Tax Credit for her daughter without claiming her as a dependent on our taxes. Is there a way to do this that I'm missing? Her exhusband will flipout if we claim his daughter as a dependent.  

Any guidance would be appreciated. 

Thanks,

J

[xmasbaby0]

Who does the child live with?   The IRS cares about physical custody.

Are you the custodial parent?  Do you have an agreement with the other parent to allow the other parent to claim them--due to divorce or that you live apart and share custody?  Did one of you sign a Form 8332?

If there is a signed 8332 then the custodial parent retains the right to file as Head of Household, get earned income credit and the childcare credit.  The non-custodial parent gets the child tax credit for children under the age of 17.

As far as the IRS is concerned, the custodial parent is the one with whom the child spent the most nights during the tax year--at least 183 nights.

[Critter-3]

" During her divorce agreement the judge decreed that her exhusband could declare their child as a dependent on his taxes each year. She could claim the Child Tax Credit each year. "

This cannot legally be ordered by a court ... they cannot decree that the ex can claim the child as a dependent and then YOU  keep the CTC ... the CTC goes with the dependency exemption. 

 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. 

[Hal_Al]

You can't do that (what the judge decreed in the divorce agreement).  It's in conflict with tax law. The Child Tax  goes together with the Dependency.  Whichever parent claims the dependency also claims the child tax credit. 

 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 (unless filing jointly with new spouse), 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  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.

"Custodial parent" is determined by physical custody, not legal custody.