Written By: Attorney, Melissa Morris

When parents divorce or separate, they can’t both claim their children as dependents on their tax returns.   The IRS has some rules about who gets the deduction if both parents try to claim it.  (These rules can be varied under certain circumstances, so call to discuss the particular facts applying to your situation.)

The right to claim the deduction is not determined by which parent pays child support.   As a fall-back position, the IRS will give the deduction to the parent with whom the child lived the longest during the tax year. (This parent is known as the “custodial parent.”)

If the child lived an equal amount of time with each parent during the year, only the parent with the highest adjusted gross income (AGI) can claim the deduction.

If a court has ordered, or if the parents agree, that the non-custodial parent gets the deduction, the custodial parent has to fill out Form 8332, (Release of Claim to Exemption for Child by Custodial Parent,) and give it to the other parent to file with his/her tax return.  

What happens if both parents claim the child on their tax returns?      The IRS will send an alert to the second taxpayer to file for the deduction.   If the parents don’t resolve the issue and withdraw the claim on one of the tax returns, the IRS will try to figure out which parent gets the deduction, and if it cannot, will audit one of them.   This whole process can take two or three years and could result in penalties and interest for the taxpayer who should not have claimed the deduction, if that person ends up having owed more taxes than he/she actually paid.

If you have questions regarding taxes or other legal issues, please call us today!