If they lived with you more than half the year, and their father is not claiming them, you may claim them for all tax benefits.
If conflicting tax returns are filed, the IRS will rule in favor of the parent the children lived with the most.
Next year will be different, since they will have lived with you less than half the year.
The custodial parent (the one the child lives with the most) has
first priority on claiming the children on his taxes; regardless of the amount
of support provided by the non-custodial parent. 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 court order, dated after 2008, gives the non-custodial parent the
right to claim the child, she must still get form 8332 from the custodial
parent. A properly worded order should require him to provide that form.
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.
