claiming child for EIC credit

[bce0]

The taxpayer is filing for the first year of her divorce, the divorce decree states she is granted head of household status and gets to claim one of her two children as a dependent each year.  The two children lived with the taxpayer for 8 months in 2024.  Setting up the turbo tax file does the taxpayer get to claim one child as a dependent and the other child as a non dependent but is eligible for EIC credit  or is the EIC credit lost for the non dependent child in the first year of a divorce?

[KeshaH]

The custodial parent qualifies for Head of Household filing status, Earned Income Credit, and Child and Dependent Care Credit (if eligible) for both children. Each parent qualifies for Child Tax Credit only for the child they are claiming.

For tax purposes, custodial parent vs noncustodial parent is determined by physical custody — not legal custody. Regardless of what the divorce decree states, the return has to be filed based on tax law.

You mentioned that the children lived with this taxpayer for eight months in 2024. If she and the children lived with her ex-spouse in 2024, it's possible that they could have also lived with the ex for more than eight months. You'd need to know if this taxpayer had physical custody for longer than the other parent to decide if she‌ qualifies to claim Head of Household filing status, regardless of the divorce decree.

If she does qualify as the custodial parent, she won't lose the Earned Income Credit for the child that she's not claiming. The second child would be considered a nondependent that's eligible for Earned Income Credit.

[bce0]

Thanks so much for clarifying my question. 

What was throwing me off was the  entry in the "you and my family" section of Turbo Tax, under the heading of how many months did the dependent live with you,  The turbo tax help question was "how many month did my dependent live with me" and the information that was provided is listed below........

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What if my spouse and I divorced or separated during the tax year?
In this case, the residency test would still be used and the parent that spent the most nights with the child would claim the child. In this case, you'll enter your info in TurboTax a little differently.

If you're the parent claiming the child, select that the child lived with you for 12 months.

If you're not claiming the child, select that the child lived with you for 0 months.

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Since the taxpayer was claiming one child as a dependent and the Ex was claiming the other child the entry in Turbo Tax was Child #1 "12" months and Child #2 was "0" which left the designation in Turbo Tax for child #1 as dependent and child #2 as non dependent.

But if the taxpayer records both children as living with them for 12 months, as outlined above, (or 8 months which they actually did) then in the Turbo Tax step by step process child #2 is checked as the other parent can claim this dependent , the status of the dependents are listed as  Child #1 Dependent and Child #2 EIC or Child Care only which follows your clarification guidance.

It was that  "What if my spouse and I divorced or separated during the tax year ?" guidance that was throwing the EIC credit calculations into question.

Again thanks so much for your thoughts on my question.