Filing Taxes with Child Custody

“Married, filing jointly” parents can claim children as dependents on their federal tax return. However, filing taxes can be more complicated once the parents get divorced. Only one parent can claim a child as a dependent if they file as single or head of household.

Income tax issues involve both federal and state tax laws. Tax laws and child custody laws are unique to each state, and questions about filing taxes with child custody are best handled by an experienced local attorney. Talk to a child custody lawyer for legal advice about your custody agreement.

Who Can Claim the Child as a Dependent?

Unless the parents file jointly, only one parent can claim their child as a tax dependent. Divorced, separated, or never married parents can’t file taxes jointly with the other parent.

Only one parent at a time can claim the dependent child each tax year. Typically, this means the custodial parent claims the child as a dependent. Whoever the child lives with the most nights during the year is the custodial parent. The other parent is the noncustodial parent.

There is a residency requirement for the child credit. Your child must live with you for more than half of the year. Limited exceptions apply when the child is temporarily away from home because of:

• Illness
• Vacation
• School attendance
• Juvenile detention

If one parent has primary physical custody of the child, then that parent can claim the child as a dependent on their taxes. However, when both parents agree, the custodial parent can relinquish the deduction on their tax return to the noncustodial parent.

The custodial parent can give the noncustodial parent a written declaration granting the ability to claim the dependency exemption and child tax credit. To release the claim, file IRS Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent.

Who Claims Your Child on Taxes if You Have 50-50 Custody?

If you have joint custody, with physical custody shared 50-50, only one parent can still claim the tax benefits of the qualifying child. Under the tiebreaker rule, the taxpayer with the higher adjusted gross income (AGI) can claim the child as a dependent on their taxes.

If parents want to share the tax credit, they can alternate years for the tax credit. The parents should agree on their tax filing each year so they don’t both claim the child in the same year. Contact a tax law professional where you live to get the best legal advice about your situation.

Can a Noncustodial Parent Claim the Child on Their Taxes?

No. Most of the time, a noncustodial parent cannot claim the child on their taxes unless they have permission from the custodial parent. If a noncustodial parent and custodial parent both claim the child as a dependent, both parents are likely to get a letter from the IRS.

Both tax filers cannot claim a child as a dependent. Generally, only married couples filing jointly can legally claim children on their taxes at the same time.

What Other Credits Can I Claim for My Child?

Claiming your child as a dependent can change your taxable income. However, other tax credits are available for married, divorced, or separated parents. Tax credits for child dependents include:

• Child tax credit (CTC): Nonrefundable tax credit to reduce your tax bill for dependent children under 17 (up to $2,000 for 2023).
• Earned income tax credit(EITC): Refundable tax credit to help low- to moderate-income filers.
• Dependent care credit: Refundable tax credit for child care expenses that allows you to work or look for a job (up to $3,000 for one qualifying individual for 2023).

A refundable tax credit means you can get the credit even if you don’t owe any taxes.

If you release your dependency exemption and sign Form 8332, you can also let the noncustodial spouse have the child tax credit. However, the noncustodial parent isn’t eligible for tax refunds using the dependent care credit or earned income tax credit, even if you sign Form 8332.

Child custody and tax filing involve both family law and tax law. Find an experienced child custody lawyer for answers to your specific questions about custody arrangements and tax deductions.