Who Claims a Child on Taxes With 50/50 Custody?

Claiming a child for tax purposes offers access to various tax credits and deductions. The process becomes intricate in situations involving shared custody, particularly when parents split time with a child equally. The Internal Revenue Service (IRS) provides specific guidelines to determine which parent can claim a child for tax benefits, aiming to clarify these complex arrangements. Understanding these rules helps parents accurately file their tax returns and claim entitled benefits.

Basic Rules for Claiming a Child

To claim a child on a tax return, the child must first meet the IRS definition of a “qualifying child.” This definition relies on several tests. The relationship test requires the child to be your son, daughter, stepchild, foster child, sibling, stepsibling, or a descendant of any of these, such as a grandchild, niece, or nephew. Adopted children are also included in this definition.

The age test specifies the child must be under 19 at the end of the tax year, or under 24 if they are a full-time student for at least five months. There is no age limit if the child is permanently and totally disabled. For the residency test, the child must have lived with you for more than half the year. Temporary absences for reasons like school, vacation, medical care, or military service are generally counted as time lived with the taxpayer.

The support test mandates the child must not have provided more than half of their own support for the year. Support includes expenses such as food, lodging, clothing, education, and medical care. The joint return test stipulates the child cannot file a joint tax return for the year, unless that return is filed solely to claim a refund of withheld income tax or estimated tax paid.

The Custodial Parent and Tie-Breaker Rules

When parents are divorced, separated, or live apart, the IRS has specific rules to determine which parent can claim a qualifying child. The general rule identifies the “custodial parent” as the one with whom the child lived for the greater number of nights during the tax year. If the child spent an equal number of nights with both parents, which is common in 50/50 custody arrangements, the IRS applies tie-breaker rules. If the child lived with each parent for the exact same amount of time, the parent with the higher Adjusted Gross Income (AGI) is the one who can claim the child. This AGI rule provides a clear resolution when physical custody is perfectly split.

Claiming Specific Tax Benefits

Claiming a qualifying child unlocks several tax benefits.

The Child Tax Credit (CTC) is up to $2,000 per qualifying child under the age of 17 at the end of the tax year. This credit is generally claimed by the custodial parent, as determined by the residency test. For children who do not qualify for the CTC, the Credit for Other Dependents (ODC) may be available, offering up to $500.

The Earned Income Tax Credit (EITC) is available to low- and moderate-income individuals and families. Eligibility for the EITC, particularly with a qualifying child, is generally tied to the custodial parent, who must have lived with the child for more than half the year. The Credit for Child and Dependent Care Expenses allows taxpayers to claim a credit for a percentage of care costs incurred for a qualifying child under age 13, or a disabled dependent of any age, to enable the taxpayer to work or look for work. This credit is also typically claimed by the custodial parent.

The Head of Household (HoH) filing status provides a more favorable tax bracket than filing as single. To qualify for HoH, a taxpayer must be unmarried, pay more than half the cost of keeping up a home for the year, and have a qualifying person, such as a child, live in their home for more than half the year. This filing status is generally available only to the custodial parent, as it relies on the child’s residency in that parent’s home.

Formalizing Agreements Between Parents

In situations where parents agree that the noncustodial parent will claim the child for certain tax benefits, formalizing this agreement helps avoid IRS issues. The custodial parent can release their claim to the child’s exemption, which allows the noncustodial parent to claim certain tax benefits, such as the Child Tax Credit and the Credit for Other Dependents. This is done using IRS Form 8332.

The custodial parent must complete and sign Form 8332, indicating the tax year(s) for which they are releasing their claim. The noncustodial parent then attaches this form to their tax return when claiming the child.

While Form 8332 allows the transfer of the Child Tax Credit and the Credit for Other Dependents, it does not permit the noncustodial parent to claim the Earned Income Tax Credit, the Head of Household filing status, or the Credit for Child and Dependent Care Expenses. These benefits are typically linked to the child’s residency with the custodial parent. A properly executed Form 8332 helps ensure both parents are aware of who is claiming what, preventing potential disputes and ensuring tax compliance.