Who Claims a Child on Taxes With 60/40 Custody?

When parents separate or divorce, determining who can claim a child for tax purposes involves understanding Internal Revenue Service (IRS) rules for dependency. While family court orders establish physical and legal custody, the IRS has its own regulations. Navigating these rules, especially with shared custody, clarifies which parent can claim a child as a dependent on their tax return.

General Rules for Claiming a Child

To claim a child as a dependent for tax purposes, the child must meet several criteria to be considered a “qualifying child.” Meeting these requirements is foundational for any parent seeking to claim tax benefits related to their child.

The criteria include:
Relationship test: The child must be your son, daughter, stepchild, foster child, brother, sister, half-brother, half-sister, stepbrother, stepsister, or a descendant of any of them, such as a grandchild, niece, or nephew. An adopted child is also included.
Age test: The child must be under age 19 at the end of the tax year, or under age 24 if a full-time student. There is no age limit if the child is permanently and totally disabled.
Residency test: The child must have lived with the taxpayer for more than half the tax year. Temporary absences for reasons like school, vacation, medical care, or military service still count.
Support test: The child must not have provided more than half of their own financial support for the year.
Joint return test: The child cannot file a joint tax return for the year, unless it is solely to claim a refund of withheld income tax or estimated tax paid.

Tie-Breaker Rules for Shared Custody

When parents share custody, such as in a 60/40 arrangement, determining which parent claims the child for tax purposes requires applying IRS tie-breaker rules. These rules resolve situations where both parents could potentially claim the same child and prevent duplicate claims.

The IRS defines the “custodial parent” as the parent with whom the child lived for the greater number of nights during the year. In a 60/40 custody split, the parent with 60% of the overnights is considered the custodial parent. This parent generally has the default right to claim the child as a dependent.

If the child lived with both parents for an equal number of nights, the IRS applies further tie-breaker rules. In such instances, the parent with the higher Adjusted Gross Income (AGI) is considered the custodial parent for tax purposes. If neither parent can claim the child, but another individual, such as a grandparent, meets the qualifying child tests, that individual with the highest AGI may claim the child. These rules are applied if parents cannot agree on who claims the child or if a court order does not specifically address the tax claim.

Releasing the Claim with Form 8332

Even if one parent is the custodial parent, they can choose to release their claim to the child. This allows the non-custodial parent to claim certain tax benefits. The mechanism for this release is IRS Form 8332.

Form 8332 provides formal documentation to the IRS that the custodial parent is waiving their right to claim the child as a dependent for specific tax benefits. This form is used when a divorce or separation agreement outlines that the non-custodial parent will claim the child. The custodial parent must sign Form 8332, providing the child’s name, Social Security number, and the tax year or years for which the claim is released. The release can be for a single tax year or multiple future years.

To utilize this release, the non-custodial parent must attach a copy of the signed Form 8332 to their tax return. The non-custodial parent must obtain this form from the custodial parent before submitting their tax return. A divorce decree or separation agreement alone is not sufficient documentation; Form 8332 or a substantially similar statement is required.

Specific Tax Benefits for Dependents

Claiming a child as a dependent opens the door to various tax benefits. Not all benefits are transferable when a custodial parent releases their claim using Form 8332. Understanding which benefits can be claimed by the non-custodial parent and which remain with the custodial parent is important.

With a valid Form 8332, the non-custodial parent can claim the Child Tax Credit (CTC) and the Credit for Other Dependents (ODC). The Child Tax Credit can be up to $2,000 per qualifying child, with up to $1,700 potentially refundable as the Additional Child Tax Credit. The ODC can be up to $500 for dependents who do not qualify for the Child Tax Credit.

However, certain tax benefits cannot be transferred via Form 8332 and remain with the custodial parent. These include the Earned Income Tax Credit (EITC), the Child and Dependent Care Credit, and the ability to file as Head of Household. The EITC and Head of Household filing status require the child to have lived with the taxpayer for more than half the year, a condition Form 8332 does not override. The Child and Dependent Care Credit is also tied to the custodial parent, as it is for expenses paid so the taxpayer can work or look for work, and the qualifying individual must live with the taxpayer.