The qualifying Tie Breaker Rules to claim children

The IRS has tie breaker rules to determine who has the right to claim a child for different credits.  Just because a person claims a child first doesn’t mean they have the right to claim the child.  If you have the right to claim a child, but someone has already claimed the child, you will not be able to efile and will have to mail your return.  Eventually, you and the person who has claimed the child will receive a letter from the IRS.  The letter will state that if you have claimed the child in error that you will need to file an amended tax return to make the correction.  Since you were entitled to claim the child you won’t need to do anything, the other person will have to file an amended return.

Under the Tie Breaker Rule, the child is treated as a Qualifying Child by:

  1. The parents, if they file a joint return;
  2. The parent, if only one of the persons is the child’s parent;
  3. The parent with whom the child lived the longest during the tax year, if the child’s parents don’t file a joint return;
  4. The parent with the highest adjusted gross income(AGI) if the child lived with each parent the same amount of time during the tax year, and they don’t file a joint return together;
  5. The person with the highest AGI, if no parent can claim the child as a qualifying child;

A person with the higher AGI than the parent who can claim the child but the parent does not claim the child.

The custodial parent may release the dependency exemption and the child tax credit to the noncustodial parent, but not the Earned Income Tax Credit(EITC).  To claim the EITC, the child must have lived with you in the United States for more than half the year.

The custodial parent must sign Form 8332 or a similar statement that the custodial parent will not claim the child as a dependent for the year.  The noncustodial parent attaches this form or statement to their return.

Sometimes the child may be a qualifying child for their grandparent.  The parent may not take the EITC for the child.  If the parents AGI is higher than the grandparent, the grandparent may not claim the qualifying child for the EITC or other child-related benefits.  If the grandparent meets the criteria to claim the qualifying child for EITC, they may under certain circumstances allow the noncustodial parent to claim the dependency exemption.

Beginning tax year 2018, the IRS requires tax preparers to retain documentation from the taxpayer which proves the dependent lives with the taxpayer.

 

David Zubler is the author of three books and a philanthropist.  All of his proceeds from the books go to a charitable foundation he created for underprivileged children.  He is also the founder of Your Tax Care which provides tax education.