Many taxpayers contend with the issue of claiming dependents on their taxes after divorce. Because claiming dependents comes with a tax exemption and other benefits — including the head of household filing status, an earned income credit and a tax credit for the child — divorced couples might find themselves arguing over who gets to claim the child on taxes.
In these situations, only one person can claim a child as a tax dependent, per federal regulations. This means that one parent will reap the tax rewards and the other will get no tax benefit.
Claiming a Child on Taxes When You’re Divorced or Separated
Knowing who claims the child on taxes with joint custody in effect might be a bit more confusing than sole-custody situations. If your divorce allows for joint custody and long-term vacation visits, you need to understand which parent has primary custody. Here’s more information on filing taxes after divorce:
Find Out: Is Child Support Taxable Income?
Claiming Dependents Under Joint Custody
If the terms of the divorce clearly identify a custodial parent — the parent who has primary custody of the child — that parent is legally entitled to claim the child as a dependent if the child passes some qualifying tests.
Many parents have 50-50 custody agreements but don’t have a written agreement regarding who can claim the child or children on their taxes. Whether you have primary custody or joint custody of a child after divorce, the fact remains that only one person can claim the child or children on each year’s tax forms.
A common remedy for an exemption tug-of-war is for parents to alternate years when claiming a child or children so they each get the tax benefits every other year. If you have more than one child and are wondering how many kids you can claim on your taxes, you can divvy up the responsibility and split your dependents between you. For example, if you have four children, every year you can select the same two children to claim. Tax deductions and credits will be easier to figure out this way, and you can avoid any mix-ups because you’ll do the same thing every year.
IRS Dependent Rules
In addition to knowing whether you can make a tax claim your child, you and your child will need to pass these IRS tests to make sure you qualify as far as the IRS is concerned:
- Relationship: The dependent must be your son, daughter, foster child, descendants such as a grandchild, brother, sister, step-sibling or extended descendant, such as a nephew.
- Age: The child must have been under 19 years old and younger than you or have been under 24 years old, a full-time student and younger than you in 2017. You can claim a child who was permanently and totally disabled in 2017, regardless of age.
- Residency: The child must have lived with you more than 50 percent of the year.
- Support: The child must not have provided more than 50 percent of his own support over the year.
- Family Income: The child tax credit is reduced if your modified adjusted gross income is above a certain amount. The child tax credit phase-out threshold is $55,000 for married couples filing separately; $75,000 for single, head of household, and qualifying widow or widower filers; and $110,000 for married couples filing jointly. For each $1,000 of income above the threshold, your available child tax credit is reduced by $50.
The IRS can serve as a guide for claiming children on taxes. In many cases, however, the delineation isn’t so clear — especially in the case of shared custody.
Child Tax Exemption
Often, a state divorce court will order that the custodial parent gives the dependency exemption to the noncustodial parent, but ultimately federal law determines who claims a dependency exemption. IRS rules state that to give up the dependency exemption, the custodial parent must sign a “release of exemption” claim, or IRS Form 8332, and attach that form to the tax return. Once that child tax credit form is filed, the custodial parent can’t claim the child tax credit for that child.
When you address the issue of claiming children on taxes, it’s important to research your rights and make your claim correctly. Getting over the hurdle of a divorce and determining dependency exemptions is challenging enough, so don’t invite further hardships by risking a tax audit.