One of the hardest parts of divorce is making decisions about children and, unfortunately, the problem even extends to your income taxes.
Children are one of the biggest issues for divorced couples when filing taxes, particularly deciding which parent will claim them as dependents. That decision will affect your tax filing status and several tax breaks like the child tax credit and education expenses.
The tax rules for divorced people only apply to those who were unmarried at the end of 2023. If you weren't legally separated or divorced at the end of the year, you'll probably need to file married jointly or married separately this tax season, although you may be able to file as head of household if you did not live with your spouse at all for the last six months of the year.
This story is part of Taxes 2024, CNET's coverage of the best tax software, tax tips and everything else you need to file your return and track your refund.
Get everything you need to know here about tax dependents and claiming the child tax credit after a divorce. For more tax tips, check out all the tax breaks for homeowners and the latest info on changes to the child tax credit.
Which divorced parent can claim the child tax credit?
To claim the child tax credit, a parent must have a qualifying dependent child younger than 17 at the end of 2023. However, only one divorced parent is allowed to claim a child as a dependent on their tax return. Parents cannot split or share the tax benefits from a child on their taxes.
The parent eligible to claim a child as a dependent is called the "custodial parent." The custodial parent could be named in a divorce agreement, but if not, the IRS gives that status to the parent with whom the child spent more nights during the year.
If custody for a child was split evenly, the IRS awards custodial-parent status to the person with the higher adjusted gross income, or AGI.
Can divorced parents take turns claiming the child tax credit?
Absolutely. Divorced parents can decide on their own or through a divorce agreement to each claim the child tax credit in alternating years.
The easiest way to take turns claiming the child tax credit is for the custodial parent to file Form 8832 every other year. That form waives the child tax credit and additional child tax credit, allowing the noncustodial parent to take both without claiming the child as a dependent.
Form 8832 only allows the noncustodial parent to claim the child tax credit and additional child tax credit for a specific year. It does not allow that parent to file as head of household or claim tax credits and deductions related to child dependents.
The other way for parents to take turns claiming the child tax credit is by making sure their child qualifies as a dependent for different parents in alternating years. In order to qualify, a child must live with that parent for more than six months, and the parent must provide at least half of the child's support.
Can divorced parents each claim different children as dependents?
Yes, as long as each child claimed satisfies the IRS requirements for dependents for each parent. The specific children would need to live for more than six months with the eligible parent, which should be relatively easy to manage if parents share custody.
In that case of different children living with different parents for more than six months, it would be possible for each parent to claim the child tax credit for individual dependents, and also remain eligible for head of household filing status and all of the tax breaks that go along with their claimed dependents.
What happens if both parents claim the same child as a dependent?
A child can only be claimed as a dependent on one tax return per year. After the IRS processes a tax return with a child dependent's Social Security number, it will not accept any other electronic returns that include that child as a dependent.
If you try to file online with a child dependent who's already been claimed by another person, your return will be rejected and you won't be able to file until you remove that dependent.
You could contact your ex-spouse and ask them to amend their tax return to remove the dependent. If that's not possible or it doesn't work, you'll unfortunately need to file a paper tax return and let the IRS determine which of you has the right to claim the child. According to H&R Block, the IRS will start the process of figuring out which parent can claim your child dependent about two months after receiving your paper tax return.
Pro tip: The best tax software will let you print a paper tax return to mail to the IRS.
In the meantime, you should collect any documentation you have that proves your child's legal status, that they lived with you for more than half the year, and that you provided more than half of their support. These documents can include divorce decrees, custody orders, birth certificates, and letters from school, day care or doctors and hospitals.
During its process, the IRS may send both of you a C87A notice explaining that someone else claimed your dependent on their tax return, giving you a chance to double-check the Social Security number you used and amend your tax return if necessary.
If neither of you amend your tax return, the IRS will start an audit for both of you and ask you to complete Form 886-DEP-H, "Supporting Documents for Dependents." Then the IRS will make a decision and impose potential extra taxes, penalties and fees on the parent who claimed the child incorrectly.
If you disagree with the IRS' decision, you can appeal or take your case directly to the US Tax Court.
Divorce is never easy, but it's much harder when unresolved issues like dependents on your taxes pop up. If you're planning to divorce or separate in 2024, be sure to discuss the custodial-parent situation with your ex-spouse so that neither of you is surprised when tax season arrives.
For more tax tips, learn about other red flags that can trigger an IRS audit and how to claim work expenses.
