If you are divorced and have 50/50 custody, you might be wondering if you can claim the child on their taxes. Use this guide to determine what to do.
Claiming a dependent on your taxes often gives you a tax break and some other valuable tax credits. However, if you share 50/50 custody with the other parent, you might be wondering who can claim them on their taxes. The IRS has specific codes for what to do on tax forms in these cases.
The parent who has the child for the most amount of calendar days is able to claim them on their taxes. This means the parent who has them for 183 days and nights based on the 365-day calendar.
This is known as the tiebreaker rule that the IRS made. Although it seems simple, you might have some questions about it. This guide will cover all the IRS rules when it comes to the 50/50 custody agreement and taxes.
Who Claims A Child On Taxes When They Share Custody 50/50?
When it comes to taxes and the IRS, the custodial parent is the one who is able to claim the child as a dependent on taxes. The custodial parent is the one who has the child for the majority of the year. However, this rule becomes confusing when each parent has the child for half the year since the time is split evenly.
You are not able to divide the child as a dependent on taxes. This means one parent is able to claim the child and the other one is not. So, the IRS made the tiebreaker rule. This means the parent who has the child for more calendar days gets to claim the child. This has to be 183 days and nights or more, according to the 365-day calendar.
The tiebreaker rule applies whether the parents are divorced, separated, or unmarried. Some people wonder what to do, though, if the child spends exactly 182.5 days of the year with each parent. The IRS has made an additional rule for this scenario.
In this case, the parent with the higher adjusted gross income is able to claim the child as a dependent for taxes. This means the parent who can claim the child might change from year to year if one of the parents gets a new job or has an increased income.
If the 50/50 custody agreement stays in place, every year, you and the other parent will need to determine who had the child for 183 days or more. If the time was exactly even, you will need to determine who has the higher adjusted gross income.
The Parents Can Decide
Although the IRS has these rules in place, the parents can also decide who they want to be able to claim the child as a dependent for tax purposes. One common agreement among parents is that they alternate years. This means one parent will claim the child for taxes and the next year the other parent will claim the child. If you have more than one child, some arrangements include one parent claiming one child and the other parent claiming the other.
If you and the other parent want to make an agreement like this, it needs to be written in the divorce decree or the separation agreement to make it official. In some cases, one parent might contribute more financially to the child, and the parents can agree that this parent will claim the child for tax purposes.
In this case, the parent should be the one paying the majority of medical expenses or school fees. This type of agreement should also be put in writing. It's always a good idea to have everything in writing as it makes it more official for tax and IRS purposes.
What If Both Parents Claim The Child For Taxes?
Some people wonder if each parent can claim a different child on taxes. The answer is yes. If you have an even number of children, you can choose to each claim a different child for taxes. However, you cannot claim the same child on taxes. This goes against IRS rules.
This can sometimes happen, though, when the parents cannot agree on who gets to claim the child. Some parents are also not on speaking terms, and they may both claim the child without the other knowing.
When this is the case, though, the IRS will reject the tax files. If you file automatically, you will get a rejection immediately. The IRS will also send out a formal notice to the parents to let them know the files have been flagged and rejected.
At this point, the parents will need to have a discussion and determine who can claim the child for taxes. Then the parents will need to resubmit their tax returns after amending them. If the parents do not amend the tax returns, the IRS can audit both the parents if they choose.
The IRS will use its tiebreaker rules in this case to give one parent the ability to claim the child for taxes. This process can be long and should be avoided at all costs. Make sure you sit down and talk to the other parent and try to come up with a solution on your own so that the IRS does not end up rejecting and auditing you, as this can add stress to the situation.
Audits can be time-consuming and give many people anxiety.
What If The Other Parent Won't Come To An Agreement?
If the other parent will not sit down with you and make an agreement on who gets to claim the child for taxes, you might need to get professional help. Some people use their divorce lawyer or their tax attorney to have a meeting with both parents.
The lawyer will be able to make a formal agreement that is written so that both parents know who can claim the child for tax purposes. Meeting with a lawyer with the other parent might seem daunting, but it's better than having to amend your taxes, and it's much better than having to go through an IRS audit.
Which Divorced Parent Gets The Child Tax Credit?
The custodial parent will get the child tax credit when it comes to filing taxes. This means if you have joint custody, the parent who has the child for 183 days will get the child tax credit. There are release claim options, though, if the parents have agreed that they have another arrangement.
In this case, the custodial parent will need to allow the noncustodial parent to claim the child as the dependent for taxes, and then they can use the child tax credit. You can also each use the tax credit if you are each claiming a different child for taxes.
Again, no matter what your agreement is, make sure to put it into writing and ask for advice from an attorney if you feel like you need it.
Dividing Tax Benefits
Despite the IRS rules, it's often better to divide the tax benefits and alternate years for claiming children as tax dependents. This is because things as simple as a holiday or vacation can change who has the children for the most amount of days and nights.
In some cases, parents have 50/50 custody, but they might live in different states. This means one parent probably has them for more time than the other. If the other parent still contributes financially, they should also be able to claim the child as a dependent which is why alternating years is often a favorable solution.
In some cases, one parent might give more financially even if they see the children less. If you are in a situation where you are working with a lawyer or appearing in court, the court might allow the parent who gives more financially to take the tax credit.
This is why it's always important to keep documentation of how much money you are giving the other parent. Some parents have agreements where one parent will pay for extracurricular activities, or they might split medical expenses.
Always make sure you can show the court or the IRS how much money you contribute each year if you think you deserve to be the parent claiming the child on taxes even if you see them less.
Claiming children when you have joint custody can seem confusing, but the IRS has outlined specific rules to help parents. Whoever has the child for 183 days and nights will claim the child as a dependent for taxes. Parents are able to make their own agreements, though, as long as they both agree and have the agreement in writing.
No matter what your situation is with the other parent, try to meet them and discuss the options for tax filing. You don't want to risk getting audited or having another issue with your tax returns.
Shawn Manaher is a former financial advisor, has founded 5 online businesses, and is a coach, speaker, podcast host, and author. He's been featured on Forbes, The Consults Corner on TAE Radio, The Writing Biz, What's Your Story, and more.