Can Both Parents Claim a Child on Taxes if Not Married?
Explore the tax implications and guidelines for unmarried parents when claiming a child as a dependent, including rules, credits, and potential consequences.
Tax considerations for unmarried parents can be complex, especially when it comes to claiming a child as a dependent. Determining which parent has the right to claim the child involves specific IRS rules and regulations. This article will provide guidance on what unmarried parents need to know during tax season.
Qualifying Dependent Rules
Navigating tax law can be daunting, particularly for unmarried parents trying to understand the qualifying dependent rules. The IRS has specific criteria to determine who can claim a child as a dependent, which is essential for accessing tax benefits. A child must meet several tests: relationship, age, residency, support, and joint return. The relationship test requires the child to be a son, daughter, stepchild, foster child, or a descendant of any of them. The age test stipulates the child must be under 19 at the end of the year, under 24 if a full-time student, or any age if permanently disabled.
The residency test mandates the child must have lived with the parent for more than half of the tax year, which often determines eligibility. The support test requires that the child did not provide more than half of their own financial support. This means the claiming parent must have contributed more than half of the child’s support. Lastly, the joint return test ensures the child is not filing a joint return with a spouse, except to claim a refund.
Tie-Breaker Provisions
When both unmarried parents qualify to claim a child as a dependent, the IRS uses tie-breaker provisions to determine who has the rightful claim. These provisions prioritize the custodial parent, defined as the parent with whom the child lived for the majority of the year. If the child spends equal time with each parent or the custodial parent releases the claim to the noncustodial parent using IRS Form 8332, the situation changes.
In cases where nights are evenly split, the IRS considers the parent with the higher adjusted gross income (AGI) to resolve the tie. This rule ensures the parent with the greater financial burden can claim the child. These provisions address situations where both parents have equal custodial rights, making AGI a decisive factor.
Claiming Child Tax Credits
The Child Tax Credit (CTC) offers significant financial benefits for parents, reducing tax liability by up to $2,000 per qualifying child under 17 for the 2024 tax year, with up to $1,500 refundable as the Additional Child Tax Credit (ACTC). This refundability allows taxpayers to receive a refund even if their tax liability is zero.
Eligibility depends on income thresholds. For single filers, the phase-out begins at an AGI of $200,000, while for married couples filing jointly, it starts at $400,000. The credit amount reduces by $50 for every $1,000 of income above these thresholds, phasing out for higher-income earners. Parents must calculate their AGI accurately to determine eligibility and potential credit amounts.
Documentation Requirements
Unmarried parents must maintain thorough documentation to substantiate claims. The IRS requires proof of the child’s residency, such as school or medical records or official mail addressed to the child at the custodial parent’s address. These documents establish the child’s primary residence.
Financial documentation is also critical. Records of expenses like childcare, school fees, and healthcare should be meticulously kept to demonstrate financial support. If IRS Form 8332 is used to transfer the claim from the custodial to the noncustodial parent, it must be properly completed and attached to the tax return.
Effects on Each Parent’s Filing
The decision of which parent claims a child can significantly impact each parent’s tax situation. Claiming a child as a dependent may allow a parent to file as Head of Household (HOH), which offers a higher standard deduction—$20,800 for the 2024 tax year—compared to $13,850 for single filers. This status also provides more favorable tax brackets, potentially lowering the claiming parent’s tax liability.
The parent who does not claim the child may face a higher tax burden, as they are limited to the single filing status and cannot access dependent-related credits such as the Child Tax Credit or the Earned Income Tax Credit (EITC). For lower-income parents, these credits can be crucial in offsetting tax obligations or securing refunds. Clear communication and planning between parents can help minimize financial strain and avoid disputes.
State tax filings may also be affected. Many states follow federal guidelines for determining dependents and filing status, but some have unique rules. Parents should review state-specific tax codes to fully understand the implications.
Consequences if Both Parents Claim the Same Child
If both parents claim the same child, the IRS has systems to address the issue. This typically triggers a review process, as the IRS cross-references Social Security numbers to detect duplicate claims. Both parents may receive a CP87A letter requesting clarification and documentation to determine eligibility.
The parent found ineligible will lose any tax credits or deductions associated with the dependent and may need to repay refunds received in error. The IRS may also impose penalties and interest on the amount owed. Repeated violations or intentional misrepresentation can lead to more severe consequences, such as a two-year ban on claiming certain credits under IRC Section 32(k). In cases of suspected fraud, penalties can escalate to a 10-year ban and potential criminal charges. To avoid these outcomes, parents should resolve disputes over dependent claims before filing and seek legal advice if necessary.