Is the EligibilityRequirementMetInd needed for MFS? I submitted and they have been rejected. My wife has had hers accepted. I am claiming my daughter as a dependent.

My taxes were rejected today apparently for the EligibiltyRequirementMetInd, form 2441. 

My wife and I are Married Filing Separately. 

I am claiming our daughter as a dependent and we pay for childcare and I have money taken from my W2 (salary) pre taxed for childcare as well, listed in W-2 box 10. 

We were both prompted by TurboTax to answer a question about an agreement regarding whom will claim the child as a dependent, and we both answered Yes since we are married and living together and agreed that I would claim her (question G in the Dependency/EIC Smart Worksheet). 

The TurboTax error says that I need to wait until March 17 to re-file.  Why?

How should I (we) have answered this question? 

My wife had her taxes accepted already. Does she need to file an amendment?

What do we do now?

Answer

If you both live with the child, you can agree who claims the child and all the benefits. The child can only be on one return and not on the other at all. The benefits cannot be split.

Per the IRS: in order for parents to split the benefits the parents must have lived apart at all times during the last 6 months of the year, whether or not they are or were married.
https://www.irs.gov/publications/p501#en_US_2018_publink1000220904

The dependent interview is confusing since it asks about custody without really explaining what that means. That can lead you to answer the questions in a manner that gives credits to both parents when they both live with the child which is not allowed. The child can only be on one parents tax return and not on the other at all.

*Only* divorced or separated parents that have lived apart for the last 6 months of the year can have a *custody* agreement. The parent that physically lived with the child is the custodial parent and the parent that did not live with the child the non-custodial parent. Under those circumstances the custodial parent can release the child's exempt to the non-custodial parent who did not live with the child with a 8332 form (which is a custody agreement).

When *both* parents live with the child, no such custody agreement can exist since both parents have equal custody and there is no non-custodial parent. The dependent and all the benefits can only be claimed by one parent.

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