When more than one person provides support for a child or other qualifying dependent, handling taxes can get a bit confusing. To make things easier, the Internal Revenue Service has established specific rules regarding who is a dependent and who can claim the dependent on her taxes. Sometimes only one person is eligible, but it is not unusual, especially with divorced or separated parents, to have more than one person claim the same dependent. If IRS rules are met, the parents can decide who claims the dependent each year.
According to the IRS, a dependent is a person for whom the taxpayer has provided support throughout the majority of the year. This person can be a qualifying child or a qualifying relative, and the relationship must pass certain tests for you to claim him as a dependent. Among the tests for a qualifying child are that at the end of the year the child must be under 19 or must be under 24 and a full-time student. He can be any age if he is disabled. The child must be related to you in some way, such as being your son, daughter, stepchild, sibling or a descendant of any of these people and must have lived with you for at least half the year. A dependent relative also must be related to you or must live with you all year. He cannot earn more than $3,700 during the year.
The main tax benefits that arise from claiming a dependent include the ability to file for the earned income tax credit and the standard dependent exemption, the ability to file as head of household and the ability to claim the applicable child tax credit. Those with eligible children can also deduct child care expenses and do not have to claim child care benefits as income. Each of these tax benefits has specific standards you must meet, and being eligible for one, such as earned income credit, does not necessarily mean that you are eligible for all of them.
Many times it is possible for more than one person to be eligible to claim a child or other person as a dependent, especially in cases of shared custody. Only one person may claim the dependent in a given year, and if there is a dispute, the IRS has specific tie-breaker rules that detail who may claim the dependent. If the taxpayers are in agreement as to who should claim the dependent for the year, they can make that decision, provided both qualify according to IRS rules. The person claiming the dependent must include a release from any other eligible persons, such as the custodial parent. The IRS requires the use of Form 8332 or a letter containing the same information, for this purpose.
If it happens that two or more people claim the same child in the same year, the IRS will apply a set of rules to the parties, resulting in only one person claiming the child for that year. If only one of the people is the child’s parent, that person may claim the child. If both parents try to claim the child, the IRS will allow the claim for the parent with whom the child spent the most time during the year or, if the time was equal, the parent with the higher adjusted gross income can claim the child.
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