Who Should Claim a Child on Taxes if Unmarried Parents Live Together?

For unmarried parents living together, determining who should claim a child on taxes can significantly impact their financial situation. Tax benefits associated with claiming a dependent include deductions and credits that can reduce tax liability or increase refunds. Understanding the criteria and rules is essential to making an informed decision.

Dependent Eligibility Criteria

The IRS has specific criteria for claiming a child as a dependent. The relationship test ensures a legitimate familial connection, requiring the child to be a son, daughter, stepchild, foster child, sibling, or a descendant of any of these.

Age is another factor. Generally, the child must be under 19 at the end of the tax year or under 24 if a full-time student. There is no age limit if the child is permanently and totally disabled, supporting taxpayers responsible for younger dependents or those with special needs.

The support test requires the child not to have provided more than half of their own support during the tax year. The parent claiming the child must have contributed the majority of financial resources for the child’s well-being.

Residency Requirements

The IRS requires the child to have lived with the taxpayer for more than half of the tax year to establish primary residence. Temporary absences, such as those due to school or medical care, do not affect residency status, recognizing that children may not always be physically present at home.

Tie-Breaker Rules

If both unmarried parents meet the criteria to claim a child, the IRS applies tie-breaker rules. The parent with the higher adjusted gross income (AGI) generally has priority to claim the child, maximizing the overall tax benefit. If both parents have the same AGI, the parent with whom the child lived the longest during the tax year is given precedence.

Support Contributions

Determining financial support is critical. It’s not just about income but who allocates more toward the child’s needs, such as housing, food, education, and healthcare. A parent directly covering these expenses may have a stronger claim to dependent status.

The Child and Dependent Care Credit, which offsets childcare expenses, is influenced by which parent claims the child. Additionally, contributions to a child’s college savings plan, like a 529 plan, can also play a role in determining eligibility.

Effects on Tax Credits

Claiming a child impacts several tax credits. The Child Tax Credit (CTC) offers up to $2,000 per qualifying child, with $1,600 refundable for the 2023 tax year. Only the parent claiming the child can benefit from this credit.

The Earned Income Tax Credit (EITC), aimed at low- to moderate-income earners, can provide thousands of dollars depending on income and the number of qualifying children. For 2023, the maximum EITC is $3,995 for one child and $6,604 for two children. The parent with the lower AGI may benefit more from claiming this credit.

The Dependent Care Credit allows parents to claim a percentage of childcare expenses, up to $3,000 for one child or $6,000 for two or more, depending on income. The parent incurring these expenses and claiming the child as a dependent is eligible for this credit.

Resolving Conflicts

When unmarried parents disagree on who should claim a child, disputes can arise. If both parents attempt to claim the same child, it may trigger IRS scrutiny and delay refunds. Parents should ideally resolve such conflicts before filing tax returns.

A written agreement or custody arrangement can provide a practical solution. For instance, parents might alternate years for claiming the child, ensuring a fair distribution of tax benefits. Documenting such arrangements clearly helps avoid misunderstandings and potential issues with the IRS.