Other rules related to income can also be implemented when necessary.
Only One Taxpayer Can Claim the Same Dependent
Only one taxpayer can claim each dependent, and this rule can complicate the issue for couples who don’t file a joint return. This rule can affect those who might be divorced or those who have never married their child’s other parent. IRS rules prohibit parents from effectively “splitting” a dependent. Only one of them can claim a child as a dependent per year. Some parents with multiple children do “divide” them at tax time, however, with one parent claiming one child and the other parent claiming the other, and this is perfectly acceptable to the IRS. Ideally, you can reach an agreement with your child’s other parent as to which of you will claim them. Otherwise, the IRS will apply its tiebreaker rules to determine which parent has the right to claim a dependent child. The parent will generally prevail and can claim the child as a dependent in a tiebreaker involving only one parent and another individual.
The Custody Ratio Tiebreaker Rule
The parent who has custody for the greater part of the year typically gets to claim the child as a dependent for tax purposes. The parent with the higher adjusted gross income (AGI) gets to claim the child if custody is split exactly 50/50, which is technically difficult when there are 365 days in a year.
The Income Tiebreaker Rule
The parent with the higher AGI claims the child as a dependent in cases where the child actually does live with each parent exactly equally. This might be the case if the child lived with a grandparent or other relative for some time during the year, and the parents evenly divided the remaining time. A caregiver with the greater AGI becomes eligible to claim the child as a dependent when no parent can claim the child, such as when grandparents, aunts, uncles, and other caregivers split custody of the child.
Parental Disagreements
A parent who doesn’t have a right to claim a child might attempt to do so anyway. It’s best to seek the advice of a tax professional or attorney in this case. If two taxpayers both attempt to claim the same dependent, the IRS will reject one or both tax returns. E-filed returns claiming the same dependent will be rejected. Taxpayers who file by mail may receive a CP87C Notice. Their returns won’t be processed until the situation is straightened out. The IRS will audit one or both taxpayers if neither taxpayer amends their return to revoke their claim to the dependent. The agency will investigate the facts of the situation and award the dependent according to the tiebreaker rules.
A Qualifying Parent Can Waive the Right
Parents who are eligible to claim a dependent can opt to allow the other parent to do so instead by completing Form 8332, the Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent. The parent claiming the child would then submit this signed form with their tax return.
