By Jade Yeban, J.D. | Legally reviewed by Rhonda Earhart, Esq. | Last reviewed June 22, 2023
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When married couples file joint tax returns, they collectively claim their children as exemptions. Unmarried couples cannot file jointly, so there may be uncertainty about who can claim the children as dependents for tax purposes. You may be asking yourself whether you can claim the parent tax credit. If you're a parent, you may be familiar with the term “dependent child" when you fill out your tax forms. But did you know that claiming your child as a dependent can lead to large tax benefits?
In some couples, only one of the parents is a legally recognized parent. In such a case, that parent claims the exemption. In other relationships, where both partners are legal parents, they agree on which parent will claim the credit. They may do so based on who will stand to gain the greater financial benefit, who has the greater need for the credit, or on an alternating year-to-year schedule.
If couples can't agree on who will claim the children for tax exemption purposes, and if there is no court order or legal agreement dictating this arrangement for you and your child's other parent, the Internal Revenue Service (IRS) provides tests to determine who can claim the Earned Income Tax Credit (EITC).
A dependent child, as defined by the IRS, is a qualifying child who meets certain conditions related to age, relationship, residence, and financial support. When you claim a dependent child, you may be eligible for several tax benefits. These benefits can include the child tax credit and the deduction for dependent care expenses.
So, who can claim the child as a dependent? Often, this question comes up in situations involving joint custody, where both parents share responsibility for a child's upbringing. Family law dictates that the child's parents can both be considered custodial and non-custodial parents depending on the custody arrangement.
Typically, the IRS allows the custodial parent, the one with whom the child spends the most time or has physical custody, to claim the child as a dependent. This doesn't mean the non-custodial parent can't claim the child; the IRS also has provisions for that. If the parents have a divorce decree or custody arrangement stipulating alternate years for each parent to claim the child, the IRS will honor this agreement. But, it's essential to have this agreement in writing. Both parents must understand the terms. The non-custodial parent can claim the child using the IRS Form 8332, which allows for the custodial parent's release of a claim to exemption.
But what if custody is evenly split? In the case of joint custody, where parenting time is equal, the IRS resorts to “tiebreaker rules." The parent with the higher adjusted gross income (AGI) can claim the child as a dependent.
In certain circumstances, if you're single or unmarried and have a dependent child, you can use the head-of-household filing status. This status comes with a higher standard deduction and could result in a larger tax refund. You might be wondering if alimony payments impact who can claim the child. The answer is no. As of 2019, alimony no longer has tax implications and doesn't affect who gets to claim the child as a dependent.
Based on IRS guidelines, the following questions can help you determine who in your family can claim the children as exemptions.
The Member of Household or Relationship Test Did the child you wish to claim as an exemption live with you for more than half the year as a member of your household, other than during temporary absences by either of you due to illness, education, business, vacations, or military service? Yes _____ No _____ Is the child related to you by birth or adoption? Yes _____ No _____ If you answered "yes" to either or both of these questions, move on to the next test. If you answered "no" to both questions, stop here. You are not entitled to claim the child as a dependent for the exemption. The Citizenship or Residency Test Was the child a U.S. citizen or resident, or a resident of Canada or Mexico, for some part of the tax year? Yes _____ No _____ If you answered "yes" to this question, move on to the next test. If you answered "no," stop here. You are not entitled to claim the child as a dependent for the exemption. The Joint Return Test Can the child file a joint return with another taxpayer? Yes _____ No _____ If you answered "no" to this question, move on to the next test. If you answered "yes," stop here. You are not entitled to claim the child as a dependent for the exemption. (Note: This situation generally arises only when the child is married.) The Gross Income Test Did the child earn less than $4,300 this tax year? Yes _____ No _____ Was the child under the age of 19 at the end of the year? Yes _____ No _____ Was the child a student under the age of 24 at the end of the year? Yes _____ No _____ If you answered "yes" to one or more of these questions, move on to the next test. If you answered "no" to all three questions, stop here. You are not entitled to claim the child as a dependent for the exemption. The Support Test Did you provide more than half of the child's financial support during the year? Yes ___ No ____ To calculate whether you provided half of the child's support, complete the following:
Is the amount of support you provided greater than the difference? If so, you provided more than half of the support for this child. If you answered "yes" to this question and passed all the tests above, you can claim the child as a dependent for the exemption. |
Remember, every family's tax situation is unique. Use this information generally. For more personalized advice, consider consulting with a professional who understands the complexities of tax deductions and dependency exemptions.
It can often be difficult for separated or separating parents to agree on child care and support. It can be especially confusing and frustrating when it comes to filing taxes.
Why not lighten your load by reaching out to a professional? They could help you complete your tax forms and negotiate on your behalf. If you're confused about your taxes, consider calling a qualified tax attorney near you today.
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