Splitting the responsibilities of raising and caring for a child can prove challenging. But filing your taxes while co-parenting does not have to be complicated. Here’s what you need to know about the changes to your tax situation if you are sharing custody with your ex.
How does child support affect my tax return?
Child support is considered “tax-neutral,” so it does not affect your tax return. Here’s why:
Let’s say you were going to buy your child a new backpack. You wouldn’t deduct the cost of a new backpack on your tax return because it is a personal expense.
Child support is treated in the same way. The only difference is that, instead of buying those personal items yourself, you give the money to your ex so they can cover expenses for your child.
Is child support taxable income?
No. If you receive child support from your ex, the payments are not considered taxable income. Child support payments count as personal expenses because you’re using the money to cover your child’s everyday needs. This makes child support tax-neutral.
Similarly, alimony is not considered taxable income if your divorce was settled after January 1, 2019. If your divorce was settled before that date, you must include alimony when calculating your taxable income.
Is child support tax deductible?
No. If you make child support payments, you should not deduct those from your taxable income. They are considered personal expenses for tax purposes, so they are not deductible.
The same is true for alimony. If your divorce was settled after January 1, 2019, you cannot deduct alimony paid to your former spouse. But if your divorce was settled before January 1, 2019, then your alimony payments can be deducted.
Who claims a child on taxes when parents have 50/50 custody?
Although you may share custody 50/50, the IRS only allows one person to claim tax benefits for a qualifying child. Two taxpayers cannot share tax benefits 50/50.
Typically, when parents share custody, the custodial parent will claim the child as a qualifying dependent. For a child to be claimed as a qualifying dependent, the residency test requires they must have lived with you for more than half the year. This means the custodial parent is the parent who has primary physical custody throughout the year.
If you share joint custody 50/50, the custodial parent is the parent who had physical custody of the child for more nights during the year. If both parents had guardianship for an equal number of nights, then the parent with the higher adjusted gross income is considered the custodial parent for tax purposes.
There are special circumstances where a child meets the requirements to be a qualifying child of more than one person. If your custody situation is not addressed in this section, refer to the tiebreaker rules outlined on page 11 of IRS Publication 504.
Can two parents claim the same child on taxes?
No, only one parent can claim a dependent on their taxes if you are filing separate returns. If you both try to claim the same child, only the first return filed will be accepted by the IRS.
In some cases, a child could be a qualifying child of more than one parent. The thing is, when it comes to receiving certain tax benefits, only one of you may claim the dependent.Those benefits include:
- Eligibility for the head of household filing status
- Child Tax Credit, Additional Child Tax Credit, or Credit for Other Dependents
The One Big Beautiful Bill (OBBB) has expanded eligibility for key family tax credits, including Earned Income Tax Credit, Child and Dependent Care Credit, and the Child Tax Credit (CTC), by adjusting income thresholds for inflation. These changes may impact your tax situation in shared custody arrangements.
What happens if a parent claims a child on taxes without permission?
Let’s say you are filing your taxes online with TaxSlayer, and you claim your child as your dependent. If your ex already filed and claimed them first, the IRS will likely reject your return because you filed second. The reject code you receive will indicate the dependent on your return has already been claimed on an accepted tax return.
If this happens to you, you will need to mail a paper return to the IRS, provide documentation proving you’re entitled to claim the child as a dependent and speak to the IRS if they contact you about your return. If possible, you should discuss correcting the return with the parent or person who wrongfully claimed the child. They can create an amended return to remove the dependent, and you will mail your original tax return to claim the dependent.
If that is not an option, you will mail your return along with Form 886-H-DEP to provide supporting documents for your dependent. This will allow the IRS to review and investigate the validity of each return. A notice from the IRS will be provided to each taxpayer requesting additional information to determine who is entitled to claim the dependent.
The IRS will apply tiebreaker rules to determine who has the right to claim the dependent. Tiebreaker rules cannot be applied to electronically filed returns, so they must be mailed. Once the IRS has completed the audit, they will assess additional taxes, penalties, and interest on the person who incorrectly claimed the dependent.
Can a non-custodial parent claim a child on their taxes?
The non-custodial parent should only claim the child as their dependent if there is a written and signed declaration from the custodial parent giving them that right. If you are the custodial parent, you can sign IRS Form 8332, allowing your ex to claim your child on their tax return.
They will need to attach the statement or the signed Form 8332 when they file their return. This allows them to claim the dependent exemption and the Child Tax Credit.
Note: Even if your ex has permission to claim the dependent on their return, non-custodial parents cannot claim the Earned Income Tax Credit for that child.
How does the IRS know who the custodial parent is?
For tax filing purposes, the custodial parent is the parent with whom the child lived for more than half the year. The residency test for qualifying children accounts for this requirement. By listing a dependent on the return, you are informing the IRS that your dependent has passed the four qualifying child tests and you are the custodial parent.
How to determine which parent has the right to claim a child on their taxes
Typically, the person who has primary custody will claim them on their tax returns. If you have equal custody with your ex, then the parent with the highest adjusted gross income may claim the dependent.
