IRS Tie Breaker Rules for Claiming a Dependent

When multiple people can rightfully claim the same individual on their tax returns, the Internal Revenue Service (IRS) relies on a set of criteria to resolve the conflict. These are known as the tie-breaker rules. They exist to ensure that tax benefits associated with a dependent, such as credits and deductions, are only claimed by one person for any given child. The rules provide a hierarchical path to determine who has the superior claim when taxpayers cannot agree on which of them will do so, preventing duplicate claims.

Determining Who Can Claim a Dependent

The Internal Revenue Code defines a dependent under two distinct categories: a Qualifying Child or a Qualifying Relative. A tie-breaker situation often arises when multiple individuals can claim the same person as a Qualifying Child, which requires meeting four specific tests.

To be a Qualifying Child, an individual must satisfy the relationship, age, residency, and support tests. The relationship test requires the child to be the taxpayer’s son, daughter, stepchild, foster child, brother, sister, or a descendant of any of them. The age test mandates the child be under age 19, or under age 24 if a full-time student, or any age if permanently and totally disabled. The residency test requires the child to have lived with the taxpayer for more than half of the year. The support test stipulates that the child cannot have provided more than half of their own financial support during the year.

A person who is not a Qualifying Child may still be claimed as a Qualifying Relative. This category has its own set of tests, including a gross income test and a support test where the taxpayer must provide more than half of the person’s total support for the year. A conflict requiring tie-breaker rules often involves a Qualifying Child, as it is common for a child to live with multiple relatives, such as a parent and a grandparent, who both provide care and meet the tests.

Applying the Qualifying Child Tie-Breaker Rules

When two or more people have a valid claim to the same Qualifying Child and cannot agree, the IRS applies a sequence of rules to make the determination. These rules must be followed in order, and once a condition is met, the analysis stops and the right to claim the dependent is settled. The tax benefits associated with the child cannot be divided.

Parent vs. Non-Parent

The first rule in the hierarchy gives priority to the child’s parent. If one of the people who can claim the child is a parent and the other is not, the parent has the right to claim the child. For instance, if a child lives with her mother and grandmother in the same home for the entire year, and both meet the tests to claim her, the mother’s claim supersedes the grandmother’s claim because she is the parent.

Parents’ Residency

If both individuals who can claim the child are the child’s parents, but they do not file a joint tax return, the next tie-breaker rule focuses on residency. The right to claim the child goes to the parent with whom the child lived for the greater number of nights during the tax year. For example, if a child spent 200 nights with the mother and 165 nights with the father, the mother has the right to claim the child.

Highest Adjusted Gross Income (AGI)

In situations where the child lived with each parent for an equal number of nights, the tie is broken by comparing their Adjusted Gross Income (AGI). The parent with the higher AGI for the tax year wins the tie-breaker and gets to claim the child. This rule ensures a definitive conclusion when the residency test results in a tie.

Non-Parents

A final rule applies if no parent is eligible to claim the child, but multiple other individuals are, such as two grandparents or an aunt and an uncle. In this scenario, the person with the highest AGI among the eligible non-parents has the right to claim the child. If a parent is eligible to claim the child but chooses not to, another person can only claim the child if their AGI is higher than the AGI of any eligible parent.

Special Rule for Divorced or Separated Parents

The tax code provides a specific mechanism for divorced, separated, or never-married parents to decide who claims a child, which can override the standard tie-breaker rules. The custodial parent, defined by the IRS as the parent with whom the child lived for more nights, has the right to claim the dependent. However, the custodial parent can voluntarily release this claim to the noncustodial parent.

This release is formally executed using IRS Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent. The custodial parent specifies the tax year or years for which the release is granted, which can be a single year, a series of years, or all future years. The noncustodial parent who receives this release must attach a copy of the completed and signed Form 8332 to their tax return for each year they claim the child.

The release allows the noncustodial parent to claim the Child Tax Credit and the Credit for Other Dependents. Certain tax benefits are not transferable and remain with the custodial parent regardless of who claims the dependency. These include:

• The right to file as Head of Household
• The Earned Income Tax Credit
• The credit for child and dependent care expenses
• The exclusion for dependent care benefits