The IRS doesn't make much simple when it comes to doing taxes. But for divorced or legally separated parents, our guide will help cut the confusion around how to decide who can claim the kids as dependents.

By Kristi Pahr
January 31, 2020

Tax season can be confusing enough—credits, deductions, exemptions, oh my—but for parents who share custody, things can get even murkier when it comes to who claims the kids as dependents. Parents who claim their children as dependents open themselves up to a number of credits and other tax breaks that could spell big bucks at refund time, so it's definitely worth checking into if you aren't sure which parent is allowed to claim the dependents.

Illustration by Chris Gash

The Internal Revenue Service (IRS) has a few guidelines to determine who can claim dependents, but even if you don't meet the qualifications, if you and your ex agree, you might be able to claim them anyway. Here's a simple look at what to do your taxes if you share custody:

1. Determine who is the custodial parent.

The parent who spends the majority of nights with the child over the course of the year is considered the custodial parent and this is the person who the IRS will favor when it comes to claiming a dependent. If you and your ex have equal custody, meaning the child spends the same amount of time with both parents, the IRS will default to whichever parent has the highest adjusted gross income (AGI) when it comes to who they will approve to claim a dependent. Some families with equal custody choose to alternate years. If you are a custodial parent, either by the majority of nights spent with the child or highest AGI, and you want to transfer dependent status to your ex, the IRS has a form for that.

2. Confirm you're not duping dependent claims.

Some divorce decrees or custodial agreements determine which parent is allowed to claim the child, so be sure to check yours before you file. If you and your ex both claim the same child, you'll both end up with an audit, and nobody's got time for that!

In the case of multiple children, some families split them, with each parent claiming at least one child as a dependent.

3. Determine which credits and deductions you're eligible for.

There are a number of tax credits and deductions parents become eligible for when they claim a dependent. The Child Tax Credit and Child and Dependent Care Tax Credit are both available for a parent claiming a dependent, and the Earned Income Tax Credit, a credit primarily for low- and moderate-income earners increases if there are dependents. Similarly, you may be able to deduct some medical expenses for child dependents.

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