When parents don't live together, or live together but aren't married, deciding who gets to claim their child as a dependent for tax purposes can be a hotly contested issue. As of 2017, the dependent exemption subtracts $4,050 from your taxable income. Special rules apply because only one taxpayer can claim the child in any given year. You can't share the deduction because you can't file a joint return if you're not married. Understanding which parent should claim child on taxes is an important element of financial planning.
If you are planning on claiming a child as your dependent, you must ensure that the child has lived with you the majority of the year. IRS rules states that a parent who hosts their child for more than six months of the year is legally entitled to claim them as a dependent.
Claiming Custody Rules
A child must live with a parent for more than six months of the year to qualify as that taxpayer's dependent. If you and your child's other parent don't live together, the parent with whom your child lived most of the time gets the dependent exemption. If you have a custody order in place, this is typically the custodial parent. The rule is relatively clear cut, unless you began the year living together as a family, then parted ways. In this case, the parent with whom the child lived most after your break-up gets the exemption. This stipulation should help provide transparency on unmarried couple with child taxes.
Another rule exists when unmarried parents live together through the entire tax year. In this case, your child lived with each of you an equal amount of time so neither of you is the custodial parent as you both had custody. When this occurs, the IRS gives the dependent exemption to the parent with the highest adjusted gross income. Your AGI is your income before the exemption, and before you claim the standard deduction or itemize your deductions.
Waiving the Deduction
Sometimes the dependent exemption does one parent more good than the other. Because it lowers taxable income, it can affect the tax bracket you fall into and possibly result in paying less of a percentage of your income to the IRS. Claiming a child as a dependent can also help qualify a parent for several tax credits. If one parent isn't eligible for a credit due to other factors, the exemption most benefits the one who does qualify. In this case, you might want to override IRS rules and transfer the deduction to the parent who has the most to gain by it. The IRS allows this. The simplest way to achieve the transfer is if the parent who should get the deduction signs Form 8332. The other parent can then file the form with his return and take the exemption.
Filing Form 8332
Form 8332 has a few limitations and doesn't work in every circumstance. You can't give the dependent exemption to your child's other parent unless your family meets certain criteria. Your child must contribute less than half to her own support and you, her other parent or both of you must provide the balance (meaning that they cannot be a true cohabitation expense splitter). She must have lived with one or both of you for more than six months so she qualifies as your dependent, and she must be younger than 19, or 24 if she's a full time student.
- IRS: Publication 504
- TurboTax: What is Adjusted Gross Income (AGI)?
- IRS. “Publication 5307, Tax Reform Basics for Individuals and Families.” Pages 1, 4, 7. Accessed Oct. 21, 2020.
- IRS. “Qualifying Child of More Than One Person.” Accessed Oct. 21, 2020.
- IRS. "2019 Publication 501: Dependents, Standard Deduction, and Filing Information." Page 16. Accessed Oct. 21, 2020.
- IRS. "Understanding Your CP87C Notice." Accessed Oct. 21, 2020.
Beverly Bird has been writing professionally for over 30 years. She is also a paralegal, specializing in areas of personal finance, bankruptcy and estate law. She writes as the tax expert for The Balance.