Who Can Claim a Child on Taxes?

You and your co-parent might agree on plenty of things. Who can claim a child on taxes may not be one of them. After a separation or divorce, claiming a child on taxes can become surprisingly complicated. This is particularly true when parents share custody or have an agreement that says they'll alternate years in taking child tax deductions. Importantly, the IRS has its own rules for determining who qualifies for claiming your children on tax returns. Your Maryland custody order may address the issue as well. Knowing how those rules work can help you avoid a tax-season dispute.

Key Takeaways

• Child support alone doesn’t dictate who can claim a child on their taxes.
• The parent claiming a child must meet federal and state dependency requirements.
• IRS Form 8332 may be required to be filed.
• Parents can agree to share tax claiming benefits, but this must be clear in their agreement and/or child custody order.

Who Can Claim a Child on Taxes?

Parents filing taxes in Maryland may want to claim their children. However, divorced or separated parents cannot both claim the same child when filing. Only one parent can claim the child as a dependent for a particular tax year, although federal law allows certain child-related tax benefits to be claimed by different parents depending on the circumstances. Generally, the parent who meets the IRS requirements to claim the child as a qualifying child is the parent entitled to claim the child for applicable tax benefits.

Qualifying-child rules under the joint-return test generally include:

• Child's relationship to the taxpayer.
• Child's age.
• Whether the child lived with the taxpayer for more than half the year.
• Whether the child provided more than half of their own support.

Maryland State Taxes

For State income tax purposes, a taxpayer can claim an exemption for each qualified dependent. A child can be a qualifying dependent if they meet certain criteria. In Maryland, you can claim a child on your state taxes if you claim them as a dependent under federal rules and state requirements. State criteria include limits on age, support provided, limits on the income earned by the dependent, residence, and household membership.

What If Both Parents Want to Claim the Child?

Both parents cannot claim the same child on their separate tax returns in the same tax year. Only one parent is entitled to make the claim. If both parents file claiming the same child, the IRS can reject an electronically filed return or require the parents to resolve the conflicting claims. If both parents generally appear to be eligible to claim the child, the IRS has rules for determining which parent has priority. Maryland courts recognize that tax dependency claims can be addressed in custody/divorce litigation. The parents will need to resolve the issue and correct the rejected tax returns.

Can Divorced or Separated Parents Agree to Alternate Who Claims the Child?

When it comes to who can claim a child on taxes, parents can agree to alternate or use a schedule to share the ability to claim the child. This allows both parents to benefit from the potential tax benefits. However, each parent will still need to satisfy the federal and state requirements for claiming a child dependent during their claim years.

When alternating, one parent can claim the child during even-numbered years and the other on odd-numbered years. When parents have multiple children, they could divide the claims based on the children. Each parent has the right to claim a specific child every year.

If parents decide to use a schedule to share tax claiming benefits, the agreement should be as specific as possible. Outline the terms of the agreement by including:

• Which parent claims which child.
• Which tax years are covered.
• Whether the arrangement changes when custody changes.
• What happens if one parent fails to cooperate with the required tax paperwork.

What Is IRS Form 8332?

IRS Form 8332 is used when a custodial parent releases their claim to the child to the noncustodial parent. It can transfer a parent’s ability to claim a child on their tax return for a specific year or range of years. The noncustodial parent can claim the child as a dependent and potentially claim the child tax credit, additional child tax credit, or credit for other dependents.

Generally, the noncustodial parent will need to attach a filled-out Form 8332 to their federal tax return when claiming the child. The IRS has specific rules about when the form is required. In many cases, a divorce decree or separation agreement cannot be used as a substitute.

Does Child Support Determine Who Can Claim the Child?

Child support and tax claims are separate issues. Paying child support alone doesn’t automatically determine who can claim a child on taxes. Receiving child support does not automatically mean the recipient parent gets the tax claim either. Parents should avoid making assumptions based solely on who pays support or who has the higher income.

What Happens When Parents Have Shared Physical Custody?

Parents who equally share physical custody can have a potentially more complicated situation. The number of nights the child spends with each parent can matter under federal tax rules. Federal tax rules include tie-breaker guidelines to determine who can claim a child when the parents have equal custody time. Maryland courts have recognized that alternating tax dependency claims can be appropriate in shared-custody situations. However, alternating tax dependency claim years are not automatic with 50/50 custody. Parents may still need to agree to an arrangement in writing, or a court may address the issue based on the circumstances.

What If Your Divorce Decree Says You Can Claim Your Child, but Your Tax Return Is Rejected?

It’s frustrating to have a tax return rejected because of a child dependency claim. Even if you are the rightful parent, the IRS may not know or agree. Maryland family law and federal tax rules and laws are two separate areas of law. While they align or operate in conjunction, they are related and not identical. If the other parent claims the child and files first, the second filing parent’s tax return is the one likely to be rejected by the IRS.

The IRS doesn’t know who the correct filer is and may still require the parents to resolve the conflicting claims through the tax process. If the disagreement involves a violation of a Maryland court order, the parent may also have family-law remedies available. However, a Maryland court cannot force the IRS to accept a particular tax return.

Parents should keep copies of any relevant documents, such as their custody order, divorce decree, marital settlement agreement, parenting plan, and IRS Form 8332. It’s also helpful to keep documentation that can show where the child lived during the year.

What Should You Do If You and Your Co-Parent Disagree?

Unfortunately, not all co-parents will agree on who will claim their children for a particular tax year. To determine which parent can claim the child, review your divorce decree, custody order, parenting plan, and marital settlement agreement. These court documents may have terms that control who can claim the children on their taxes.

If the documents are unclear or the other parent isn't complying, consider speaking with a Maryland family-law attorney. If the issue involves both family-law obligations and federal tax consequences, getting advice before filing may prevent a much bigger dispute.