What Happens If Two Parents Claim the Same Child?
Understand the tax implications and IRS process when multiple parents claim the same child. Learn how to navigate and prevent these common tax conflicts.
When two parents claim the same child as a dependent on their tax returns, it creates a conflict the Internal Revenue Service (IRS) resolves. This situation frequently arises, particularly among divorced or separated parents, leading to significant tax complications. Understanding the IRS’s methods for identifying and resolving these duplicate claims is important for tax compliance. The process involves specific rules and procedures that determine which parent is entitled to claim the child for tax benefits.
IRS Detection and Notification
The IRS employs automated systems to identify duplicate claims for dependents during tax return processing. When a child’s Social Security number (SSN) is used on more than one tax return, the system flags these returns. If an e-filed return attempts to claim a dependent already claimed on a previously accepted return, the second e-filed return will be rejected, indicating the duplicate SSN.
Upon detecting a duplicate claim, the IRS sends notices to both taxpayers involved. Common notices include CP87A, which informs taxpayers that a dependent listed on their return has also been claimed by another taxpayer. The notice provides the last four digits of the dependent’s SSN for verification and instructs the recipient to review the rules for claiming a dependent. Other notices, such as CP08, might request more information about a dependent, while CP75/CP75A indicates an audit of the dependent claim. These notices do not disclose the identity of the other filer due to privacy laws but request clarification or additional information from both parties to determine the rightful claimant.
IRS Tie-Breaker Rules
The IRS applies tie-breaker rules to determine which taxpayer can claim a child as a qualifying child for tax benefits. These rules are outlined in IRS Publication 501. The primary consideration is whether the individual is a parent of the child. If only one of the taxpayers claiming the child is a parent, that parent has priority.
When both parents claim the child, the “custodial parent” rule applies. The custodial parent is the parent with whom the child lived for the greater number of nights during the tax year. If the child lived with each parent for an equal number of nights, the parent with the higher Adjusted Gross Income (AGI) is considered the custodial parent and has the right to claim the child.
A noncustodial parent may claim the child as a dependent if the custodial parent provides a written declaration releasing their claim. This is done using IRS Form 8332. The noncustodial parent must attach a copy of this form to their tax return. Form 8332 allows the noncustodial parent to claim benefits such as the Child Tax Credit and Credit for Other Dependents, but does not transfer eligibility for the Earned Income Tax Credit, Child and Dependent Care Credit, or Head of Household filing status, which remain with the custodial parent.
The Resolution Process
Upon receiving an IRS notice about a duplicate dependent claim, taxpayers should review the notice and compare the dependent’s Social Security number with their records. If the dependent was claimed incorrectly, the taxpayer who made the error should file an amended tax return using Form 1040-X to remove the dependent and associated tax benefits. This form allows for corrections to income, deductions, credits, and dependents.
If neither party amends their return, or if both believe they are the rightful claimant, the IRS may initiate an audit to determine who is entitled to claim the dependent. During an audit, both parties must provide documentation to support their claim, such as proof of residency (e.g., school records, medical records, or a log of nights spent with the child) and support provided. If the IRS determines that a taxpayer incorrectly claimed the child, that taxpayer may be required to repay any tax benefits received, along with interest and potential penalties. Accuracy-related penalties can be 20% of the underpaid tax, and in cases of intentional fraud, penalties can reach 75%.
Preventing Future Duplicate Claims
To avoid future issues with duplicate dependent claims, clear communication between parents, especially those who are divorced or separated, is important. Establishing a written agreement that specifies which parent will claim the child each year can prevent misunderstandings. This is useful in situations where parents alternate claiming the child or have multiple children and agree to each claim a different child.
Understanding the IRS tie-breaker rules before filing a tax return is important. If there are complex custody arrangements, consulting with a tax professional can help ensure compliance with IRS regulations and properly allocate dependent-related tax benefits. Such proactive measures can help both parents avoid the complications and potential penalties associated with duplicate claims.