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. If separated or divorced parents can't agree on who should claim the child, IRS tiebreaker rules go into effect.
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. A qualifying child is one who is either under 19 on the last day of the tax year or is 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.
When a child divides his time equally between his divorced parents or other caregivers, it's possible that both may meet the requirements necessary to claim him as a dependent. In that instance, it's common for the parents to share the benefits of claiming him by taking turns. One parent will claim the deduction in even years while the other parent claims it in odd years. Of course, the parents may agree to any arrangement they like. While it's possible for two different people to claim a dependent in different years, parents may also designate one party to claim the deduction every year.
Separated Parents Benefits
Tax breaks are the reason divorced parents and other support providers sometimes squabble over who will claim a child as a dependent. 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. Noncustodial parents who share equally in the support of their children don't want to miss out on these tax benefits and may wish to claim their child as a dependent in some tax years.
Claiming a Child in 2018
Tax law changes going into effect for 2018 will change the rules. The Tax Cuts and Jobs Act of 2017 eliminated personal exemptions, so claiming your child as a dependent no longer grants you an automatic deduction from your income. You are, however, still allowed to claim a dependent for purposes of the Earned Income Credit and other child tax credits. Only one person may claim the dependent in a given year, however. If you and someone else both claim the same dependent, the IRS will use tie breaker rules to determine who may make the claim. 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.
Claiming a Child in 2017
If you claimed your child who did not live with you as a dependent in 2017, make sure the child's custodial parent filed IRS Form 8332. Through this form, the custodial parent informs the IRS that you claimed the child as a dependent and had permission to do so. The custodial parent may also use this form to release their right to claim the child indefinitely. In that case, you can claim your noncustodial child in 2017 and every year thereafter unless and until the custodial parent files another Form 8332 reinstating their right to claim the child.