Most Common Tax Season Question:
We frequently get asked which parent gets to claim a child on their taxes. Communication is the first line of defense. If the parents don’t discuss the matter and both parents file electronically, the one that files first will generally be accepted by the IRS. The second return will be rejected because the child’s Social Security number will have already been used by that first return.
If the second parent is entitled to claim the child, the rejected electronic return can be converted into a paper return and filed by mail. If this is done, the IRS will start a review of both returns causing the IRS to review the relationship, age, residency; support, and joint return tests to determine if the child could be a qualifying child of more than one person.
While its possible for the child to be a qualifying child for more than one person, the IRS only allows one person to actually treat the child as a qualifying child. Some or all of the following tax benefits could be available for the parent who can claim the child as a qualifying child:
• The taxable exemption for the child.
• The child tax credit.
• The ability to file utilizing head of household filing status.
• The ability to utilize tax credits for child and dependent care expenses.
• The exclusion from income for dependent care benefits.
• The claim an earned income credit
Since the “other parent” cannot take advantage of any of these benefits, if the parents can’t agree on which will use the “qualifying child” on their return, the IRS has established “Tiebreaker Rules” to determine which person can treat the child as a qualifying child to claim those tax benefits.
Some of the “Tiebreaker Rules” include:
If the child lived with both parents for the same amount of time during the tax year, the IRS will view the child as the qualifying child of the parent who had the higher adjusted gross income (AGI) for that tax year.
If neither parent can claim the child as a qualifying child, the child is viewed as the qualifying child of the parent who had the highest AGI for that tax year
If a parent can claim the child as a qualifying child but no parent actually does claim the child, the child is viewed as the qualifying child of the parent who had the highest AGI for that tax year, but only if that parent’s AGI is higher than the highest AGI of any of the child’s parents who can claim the child.
For more information, see IRS Publication 501