Claiming a Child on Taxes Post-Divorce

When you are married to your child’s other parent, claiming a child on taxes is a relatively straightforward matter. After divorce, that changes, as parents file taxes separately. Who can claim a child on taxes after a divorce? What happens if both parents try to claim the same child as a dependent in the same year? And how long can you claim a child as a dependent?

With tax season 2024 approaching rapidly, it’s important for divorcing parents to understand the rules about claiming a child on taxes.

What Does it Mean to “Claim a Child” on Taxes?

Claiming a child on taxes means that you have identified that child as a dependent for tax purposes on your income tax return. Claiming a child as a dependent can make you eligible for certain tax benefits that may be worth thousands of dollars to you. For instance, the federal Child Tax Credit (CTC) is worth up to $2,000 per qualifying child for tax year 2023 (for which returns will be filed in 2024).

The CTC is especially valuable to parents. As a tax credit, it reduces the amount of tax you owe dollar for dollar (unlike a tax deduction, which reduces your taxes by reducing the amount of your taxable income). Also, the CTC is a partially refundable tax credit, which means that if the amount of your credit is more than the taxes you owe, you can get a refund. You must meet multiple requirements to be eligible for the CTC.

Claiming a child on taxes may also make you eligible for other tax credits, such as the Earned Income Tax Credit (EITC) and various education credits.

Who Can Claim a Child on Taxes After Divorce?

IRS guidelines regarding which parent has the right to claim a child on their tax returns center primarily around the issues of where the child resides and who provides financial support for the child. In general, the parent with whom a child lived for more than half of the year is entitled to claim the child as a dependent on their taxes, even if the other parent provided most of the financial support for the child. However, the primary custodian may agree to relinquish this right to the other parent under certain circumstances, such as if claiming the child on taxes would provide a greater financial benefit for the other parent.

The custodial parent can release their right to claim the child using IRS Form 8332 (Release of Claim to Exemption). This form can be used to release the exemption for a child for one year, or for the current year and future years as well. You should understand that signing this form, or having the other parent sign it, applies to the right to receive some tax credits, but not others. Speak to your divorce attorney or tax professional to understand the implications of using this form to release an exemption, or to revoke a release.

Who Can Claim a Child on Taxes When Parents Share Equal Time with the Child?

The reason a custodial parent usually gets to claim a child on their taxes is that the person with whom a child lives typically provides more support for the child. When a child resides equally with both parents, they cannot both claim him or her, so what happens? In that situation, the right to claim the child may go to the parent who provides a greater amount of financial support for the child or who has a higher adjusted gross income (AGI). It is best for parents to have a written agreement identifying who has the right to claim the child, so that there is no confusion at filing time.

Parents can also decide in their marital settlement agreement to alternate years claiming the child on their taxes. In this situation, the parent who would ordinarily have the right to claim the child can waive that right in alternate years through the use of IRS Form 8332.

What Happens if Both Parents Try to Claim the Child on Their Taxes in the Same Year?

As you can imagine, the IRS takes a dim view of this form of “double-dipping.” Under IRS rules, a child may be a “qualifying child” for both parents, but only one may claim the child as a dependent. Whether intentional or accidental, two parents trying to claim the same child as a dependent in the same year can trigger tax audits, IRS investigations, financial penalties, or other legal consequences. These consequences can easily outweigh any financial benefit of claiming the child, so before you claim your child on your taxes, make absolutely sure you have the legal right to do so.

Even if parents don’t face penalties when they each claim the child, at a minimum, doing so will slow down the processing of their taxes while the IRS works to determine which parent has the right to claim the child.

How Long Can You Claim a Child as a Dependent?

We are sometimes asked by divorcing parents, “Can I claim my adult child as a dependent?” The IRS considers a child a dependent if they are under the age of 19, or, if a full-time student, under the age of 24. If your child is permanently and totally disabled, they are considered a dependent by the IRS regardless of their age.

To learn more about claiming a child on taxes and divorce, or to schedule a consultation to discuss your situation, contact Strickler, Platnick & Hatfield.