It's worth claiming dependents if you're entitled to do so, but the rules can be tricky in cases of joint custody or in the event of a dispute. The IRS has instituted a series of tiebreaker rules to clearly indicate who can claim each dependent when parents can't agree.
The Tax Cuts and Jobs Act has repealed personal exemptions from the tax code from 2018 through at least 2025, but having one or more dependents can still open the door to numerous other tax breaks. Claiming a dependent can allow taxpayers to take advantage of the head-of-household filing status and numerous tax credits and deductions.
Only One Taxpayer Can Claim the Same Dependent
Only one taxpayer can claim each dependent, and this can complicate the issue if you're not a married couple who's filing jointly. This rule can affect those who might be divorced or those who have never married their child's other parent.
Internal Revenue Service (IRS) rules prohibit parents from effectively "splitting" their dependent. Only one of them can claim a child as a dependent per year. Some parents with multiple children do "divide" them at tax time, however, with one parent claiming one child and the other parent claiming the other, and this is perfectly acceptable to the IRS. Your children don't have to be a package deal for tax purposes.
Ideally, you can reach an agreement with your child's other parent as to which of you will claim them. Otherwise, the IRS will apply its tiebreaker rules to determine which parent has the right to claim a dependent child. The parent will generally prevail and can claim the child as a dependent in a tiebreaker involving only one parent and another individual.
The Custody Ratio Tiebreaker Rule
The parent who has custody for the greater part of the year typically gets to claim the child as a dependent for tax purposes. The parent with the higher adjusted gross income (AGI) gets to claim the child if custody is split exactly 50/50, which is technically difficult when there are 365 days in a year.
One parent is likely to have the children for at least one more night than the other, even in perfectly scheduled shared custody arrangements. The IRS would give the right to claim to that parent.
The Income Tiebreaker Rule
The parent with the higher AGI claims the child as a dependent in cases where the child actually does live with each parent exactly equally. This might be the case if the child lived with a grandparent or other relative for some time during the year, and the parents evenly divided the remaining time.
A caregiver with the greater AGI becomes eligible to claim the child as a dependent when no parent can claim the child, such as when grandparents, aunts, uncles, and other caregivers split custody of the child.
A parent who doesn't have a right to claim a child might attempt to do so anyway. It's best to seek the advice of a tax professional or attorney in this case.
If two taxpayers both attempt to claim the same dependent, the IRS will reject one or both tax returns. E-filed returns claiming the same dependent will simply be rejected. Taxpayers who file by mail will receive a CP87C Notice. Their returns won't be processed until the situation is straightened out.
The IRS will audit one or both taxpayers if neither taxpayer amends their return to revoke their claim to the dependent. The agency will investigate the facts of the situation and award the dependent according to the tiebreaker rules.
All received tax returns are screened through an IRS computer to check for this and other red flags.
A Qualifying Parent Can Waive the Right
Parents who are eligible to claim a dependent can opt to allow the other parent to do so instead by completing Form 8332, the Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent. The parent claiming the child would then submit this signed form with their tax return.
Frequently Asked Questions (FAQs)
How do you change a court order about who can claim a child on taxes?
In general, to change a court order, you need to file a motion. When it comes to taxes, a court order may not be relevant. According to the IRS, federal law determines who can claim a child as a dependent on federal income taxes. If a noncustodial parent were granted the right to claim a child by a court order, the custodial parent would need to return Form 8332 or a similar document. If the custodial parent wants to claim the child, however, they have the right to do so under federal law if the child lives with them the majority of the time.
Who claims a child on taxes if you're not married?
If you're unmarried and you don't live together, who claims the child depends on who has custody the majority of the time. If there's a dispute, the claim would be determined by the IRS tiebreaker rules. If you live together, the parent with the higher AGI can claim the child.