Splitting an exemption is not illegal if you follow the proper rules. Learn how here.
Sometimes when I’m working with a divorced couple, it seems that the most beneficial way to prepare the tax return is to split the exemption for their child. When I say that, they always tell me, “But I heard that was against the law!” No—that’s not exactly true. But let me tell you, there is a right way and a wrong way to do it. If you follow the rules and do it correctly, it’s not only legal, it’s the right thing to do. Warning: if you don’t follow the rules, you could be breaking the law. I give a lot of advice to do-it-yourselfers, but if you’re planning to split an exemption, I recommend you go to a professional for it. (And if she tells you it can’t be done—hire somebody who knows what she’s talking about.)
With most divorced couples (I’m including here couples who were never married but have split apart and have lived apart for at least 6 months of the past tax year), one parent (usually the mother) has custody and the other parent (usually the father) has visitation rights. A lot of couples say that they have “joint” custody – for example, the kids stay with the dad every Wednesday night and every other weekend and with the mom the rest of the time. If you count the days, under IRS rules, the mother wins on the custody status. According to the IRS, wherever the child spends the most nights is where the child lives—if you’ve got one of those every other weekend and every Wednesday night agreements, the IRS doesn’t count that as being equal.
In my example, I’m saying the child lives with the mother. In IRS lingo, the mother in this example is the “custodial” parent and the father is the “non-custodial” parent.
In this case, the mom has all the power—she’s the custodial parent. The mom can claim all the benefits of having a child on the tax return. Those benefits include:
- Head of Household filing status-a lower tax rate
- Childcare tax credit-credit for money you spend on daycare
- Childcare exclusion-so you don’t get taxed if your company pays for daycare
- Earned Income Credit-this can be worth up to $3,094 for one child
- Exemption for the child-a deduction of $3,600 off your income
- Child Tax Credit-worth up to $1,000
When tax professionals tell you that you can’t split exemptions, what they’re reading is the section of Pub. 17 (that’s like our Bible for tax stuff) that says these things always go to the same person. What they’re not reading is page 31—the part that tells you about the special rules for divorced or separated parents. Under the special rules section, it says that the mom (our custodial parent) can release the exemption for the child to the father (the non-custodial parent). This lets him claim the exemption and the child tax credit on his return, while the mom keeps the head of household status, the dependent care credit, and the EIC on her return.
Why would anyone want to do this? Lots of reasons! Number one, of course, is to maximize the amount of money you get back from the government. A lot of times, after a divorce, the mom doesn’t have a very high taxable income. Remember, child support isn’t taxable. The dad has lost a lot of his deductions so his tax bill could be pretty high. He’d probably never qualify for an earned income credit anyway, but the $1000 child tax credit would really help him out. If the mom’s taxable income is really low, she wouldn’t even qualify for the $1000 child tax credit. In some cases she could give it away without it hurting her at all. Or maybe the father is behind on child support, she could negotiate: if he catches up on the child support by December 31st, she’ll sign the form to allow the father to claim the child’s exemption. Remember, when claiming the exemption for a child, the custodial parent has all the power. If the dad claims the child without permission, the mom can just file her own return fully claiming the child and sending the dad’s return to the IRS audit division. You don’t want that to happen.
Splitting an exemption isn’t the best choice for everybody. You have to look at both returns and see if it’s going to work. It also helps to be on good terms with the ex—this certainly doesn’t work well with people who are fighting.
There are a lot of other rules that I haven’t even touched. (That Pub. 17 book is 295 pages long!) But if you are divorced or separated, you need to know that splitting an exemption might be an option for you to use on your income tax return.
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Here are some links that might help:
EIC questions of any kind: EITC Assistant
How to find free tax preparers: Free Tax Help
How to find your local IRS office: Find an IRS Office
Hi Kelli,
The IRS doesn’t care about court orders. The IRS cares about who the children live with.
What if your court order says whomever made the most claims the child and then it’s a 50/50 split… but the father is the one making the most and has another child with another woman, splits the IRS refund into separate accounts before making the payment? Only one court order for one child in place.
Hi Max,
I think you’re going about it the right way, but I don’t have all of the facts. Here’s something that may help you: Court Ordered Exemptions and the IRS
So, it depends on the year the court order was signed. Also – if your court order requires you to pay child support, then you have a problem, as “conditions” nullify your right to claim in the IRS eyes.
Ideally, your ex should sign a form 8332 allowing you to claim the exemption. But – you have 50/50 custody – so if you have your child for exactly 50 percent of the time, she wouldn’t be signing the 8332 to allow you to claim the exemption – because you’ve got custody.
But here’s where you could have a problem: you pay child support. That implies that you don’t have custody. Sure, you have 50/50 custody on paper – but where does your child sleep? That’s going to be the big issue.
You see, there’s a big difference between claiming a court ordered exemption–which gives you an exemption for a tax deduction and the child tax credit, versus claiming the child for a head of household filing status – which gives you the lower HH tax rate, higher standard deduction, and the possibility of claiming the earned income tax credit.
So – really, it’s all a matter of what you’re actually claiming here, and, are you right? But you’re working with a professional so I’m guessing that she knows what’s what and has you covered.
Hi Mariah,
You’ve got a whole lot going on there. First – let’s start with whether or not you’re married. You filed as married, but are you? You said, “common law” married. A lot of people get this wrong. That’s why I’m pushing this. There are only 12 states that recognize common law marriage: Alabama, Colorado, the District of Columbia, Iowa, Kansas, Montana, New Hampshire (but only for inheritance purposes), Oklahoma, Rhode Island, South Carolina, Texas, and Utah. So if you don’t live in one of these states, or began your common law marriage in one of these states, then you’re not married – not matter what type of tax returns you filed or how long you were together.
So fist – let’s say you really qualify as being married. Then – you’re married. Even though he’s not living with you, you’re married and the kids live with you so – yes. he can claim the kids. And you! He can claim married filing jointly because you’re his wife. Unless you divorce him, or get a legal separation, there’s not much you can do. You could file a return, claiming the boys, but since you have no income it won’t get you any money. But he has a legal right to file a tax return and claim the boys.
But if you are not married – that’s a little stickier. They boys live with you more, you are the custodial parent. You have a better claim if you file and claim the kids – but like I said, since you have no income, it won’t get you any money.
Spitting the exemption does you no good, because, as I said – you have no income.
Plus – and this is probably the most important part. He got arrested for d.v.! You don’t want to have too much to do with this guy. Once you go back to work, you’ll be claiming the kids yourself, but you do whatever it is you need to do to protect yourself and those kids. But the IRS isn’t going to be much help to you on this one. Sorry.
Hi Jennifer,
This post might be for you: Tax Strategy for Exes that Get Along
So, what you need to do is have your ex file as head of household – stating that the children live with him for over half the year. But he will “release the exemption” to you. He will sign an 8332 release giving you the exemption. He keeps his head of household filing status. You lose nothing because you use the married filing jointly status, and you gain the child tax credit. Awesome.
But – With the new tax law, the income requirements are changing so he may qualify for the child tax credit in 2018, so you’ll want to have him do his taxes first, before he releases the exemption to you for 2018.
But – (One more thing, right?) If he hasn’t qualified for the CTC for the past two years, he an sign the 8332 for for those years and let you claim the exemption, you both file amended returns. You will need to pay huim what he loses to make him whole because he does lose something by giving up the exemption – even if he doesn’t get to claim the child tax credit and the value of the exemption. He will lose the value of the exemption – so you’ll need to do something to make him whole for that.
Hi Jan!
Thank you so much for taking the time to answer tax questions. My situation is a touch unique, and my tax advisor has stated that I should be in the clear but I’m looking for a second opinion on the matter.
Mom and I are split up, have been for a long time. 50/50 custody. Prior to our split we went to mediation and eventually to family court to have some ‘rules’ drafted up to become a court order. One ‘rule’ of which was agreed upon between us, was that we would alternate years between claiming our son. It is in writing and has been court certified.
However, mom has not been keeping her end of the bargain and as of a year ago, I have decided to mail in my taxes claiming him on ‘my years’ instead of doing nothing.
Again, I was advised that this should be ok considering we have paperwork to prove what I say.
The IRS has sent the follow up letters regarding our son being claimed twice, I do send a photocopy each time of the court order in regards to this.
Oh, one more thing, I am current on child support.
Should I be worried or am I going about this the correct way?
Hi so I don’t know how this goes.. so my boys father and I filed married for the last 3 years . Jan 1st he got arrested for d.v. And has restraining Order against him .. he gets my 2 boys on the weekends which started a couple weeks after Jan. Cause he got bonded out. And my boys stay with me monday through Friday evening. Can he claim my boy 2 boys with out my permission and can he claim me as well and not give us the money … I’m not working I been a stay home mom for a year because I have another son that 9 months old. I stopped working knowing I was high risk.. And does he need a legal seperation knowing we are common law married for 6 years. ? Our tax lady knew I was pregnant with our 3rd son . Knowing that she knows will she let him file anyways just for my 2 boys and not the 3rd boy . Or does she need me to sign and put our 3rd child down knowing we filed for 3 years together . He hasn’t supported my children until after he got out of jail. My Son are 3 and 2 and 9 month old baby. I need as much answers as I can get . My boys need the money they are growing and I was wondering if he was able to split . Or can be get in trouble for doing what he is doing
My ex claims one child and I claim the other. I noticed that my ex has not qualified for the child tax credit for the last 2 years. Neither of us qualify for the Earned Income Credit. I do qualify to receive the child tax credit for both of my children. I do not claim the Dependent Care Credit on either child. My ex files as head of household and I am married filing jointly. Is it legal for me to claim the same child as my ex and get the child tax credit for which my ex does not qualify?
Hi Roxy,
You can’t split an exemption with anyone but another parent. Only one person may claim the child on a tax return.
Tax Advice: Tie-breaker rules You can check out the tie-breaker rules about who has the right to claim your child on your tax return.
Non-tax advice: You need to think about the type of person you have watching your child if she’s claiming your child on her tax return and lying to you about it being set in stone. Is Grandma claiming your daughter because she’s using the money for the best purposes for your child? Is she a good Grandma? Or is she using you and your child for her personal gain? You’re the one who knows the answer. If this woman isn’t putting your child’s interests first, then you have a bigger issue than your taxes.
Can you give me some advice here? My daughter lives with me and her grandma an equal amount of time. Can we both claim her? Her grandma only started working the end of last year. She said she already filed is it all already set in stone or can I still claim her for part of the year? Is there anything I can do?
Hi Leanna,
I can’t give you legal advice. As far as taxes, go, you could allow him to claim the exemption and child tax credit – while you keep the second child for EIC purposes (if you qualify for that.) Split Exemptions
I guess that means I’m siding with your local tax preparer.
Hi Jan,
Each year since my kids were born, I’ve always claimed my children on my tax return simply because their Dad wasn’t legally their Dad. My ex & I lived together up until April 2016. We went to court & obtained joint custody in August 2016- during this time the children were with me 100% of the time, no help from Dad at all. Different situations kept him from getting the children since August, every other week as stated in the court order. He got them starting in November, for a total of 1 month 3 weeks since we left in April. The court decided since we have 2 children, he can claim one & I claim one. Does that mean he can claim one for 2016 even though he didn’t have them himself for at least half the year? What are the IRS rules for that? My lawyer has advised us to follow the rules & that the court order doesn’t mean he can claim them when/if he didn’t have them. Meaning the court order is future reference giving he gets them as he should. A local tax preparer told him that he should claim one of our children even though the court order doesn’t state any specifics for the past year. Can you please help me!
Hi Penny,
I’m assuming that your child lives with you more than half of the year and not with your ex. In that case, he would file as single and claim the exemption and the child tax credit only. He would not be able to claim the head of household filing status, the child care status, not the Earned Income Credit.
Please excuse the typos
I’m agreeing to let my ex house claim the exemption of our child. I’ve remarried, so I won’t claim head of household. Instead, I will be filing my taxes as married filing jointly. Does,this mean that my ex husband can claim head of household, sine I’m letting him claim the exemption of our child or is he required to still filing single along with this exemption? Thanks in advance.
Penny
Hi Nathan,
This won’t work for couples living together. Only one of you may claim the child for the EIC, head of household filing status, child tax credit, and the exemption. But – you can choose between the two of you which one should claim the child. Now, there’s a thing called “tie-breaker rules”. In the tie breaker rules, the parent with the higher income – everything else being equal, gets to claim the deduction. But – and this is important – you only need the tie-breaker rules if you two disagree over who gets to claim the child.
So—- in your case, you and your child’s mother should both prepare your returns each way, and working together, have the person who gets the better tax advantage claim the baby. As long as you two are working together as a family team – the tie breaker rules don’t have to be applied. Does that make sense? Because you live together, only one person gets to claim the child – but you can decide between you which one should. You don’t get to do the split thing.
Does this also work for couples who are NOT married but have been both together as a couple (sharing all expenses etc.) AND living together since the birth of the child (10months as of Dec. 21st)…??? Or does this only apply to those who have been married and since divorced???
Thanks!!!!
Hi Carol G
Thanks. You’re right. Allison is caught up in the wrong part of Pub 17. And it’s really frustrating, I’ve heard IRS agents get it wrong too. (At which point I have to politely show them the tax code.) But it’s probably one of the most mis-understood tax rules around.
This comment by Allison is WRONG: “The other person can’t take any of these
benefits (1-6) based on this qualifying child”
Allison, read the tax code. Even if the parent does not take the exemption for the child for that year, he/she is still eligible for Head of Household status.
Hi Kate,
First, I’m not a lawyer so I have no authority to advise you about parental rights. All I can talk about is tax. It sounds to me like you are still married? You mention finalizing things. If you are still married – and you have not lived apart from at least July 1 onward – then your filing status is Married Filing separately. If you were apart from July 1 onward and you are claiming one child – then you may be able to claim Head of Household.
Since you agreed to each claim one child – and they are with you more – I would claim the one you are supposed to claim and mail your tax return in. The IRS will ask you to prove your claim – but since the kids live with you – you should have no problem doing so.
This question has been previously asked but I cannot find a response. My ex and I have 50/50 custody of our 2 children. We agreed each of us would claim 1 child. However, she claimed both on her return. The children actually spend more time with me. Furthermore, for months, her lawyer will not return my lawyer’s calls to finalize anything so I still have been unable to file a tax return. I have been granted an extension but don’t see a resolution in the near future. Please advise me on my parental rights. Thank you!
Hi Kevin,
You can’s split the child tax credit. Sorry, but it doesn’t work that way.
Hi Allison,
Read Pub 17 page 32, Chapter 3, column one. Applying tiebreaker rules to divorced or separated parents.
Hi Amy,
Good question. You’re right, if your ex signs the 8332 to you so that you can claim the exemption, you qualify for the exemption. I’m guessing that your son is too old for you to claim the child tax credit – which goes along with the exemption. You will not be able to claim head of household on your son. (If you have another dependent, you can still claim head of household, but if your son is the only dependent, then you will need to file as single.)
Your ex – who is claiming that he is the custodial parent for 2016 – he can claim head of household.
I hope that clears it up.
Hi Joan,
Is the boyfriend the biological father of the children? If no, then you are Head of Household and you claim the kids – no matter what.
If yes, then we go to question #2.
Are you two in a loving, committed relationship and working towards what’s best for the children and your family as a loving family unit?
If no, then you are Head of Household and you claim the kids.
If yes, then you play with how you claim everything to get the most refund (or pay the least tax.) I want you to read my post about Exes that Get Along
I realize that you’re not exes, but the tax strategy works the same way for unmarried couples. Go for the biggest refund and bank that extra money to put towards your kids going to college or something special.
My girlfriend and I separated, we have a 4 year old son who lived with us his entire life and she always claimed him on her taxes every year, I wanted to claim him but she always did her taxes before I could do mine, my question is can I do an amendment on my taxes for the last 3 years to get half of the child tax credit.
This information is completely false. Pub 17 explicitly reads…” Sometimes, a child meets the relationship, age,
residency, support, and joint return tests to be a
qualifying child of more than one person. Al-
though the child is a qualifying child of each of
these persons, only one person can actually
treat the child as a qualifying child to take all of
the following tax benefits (provided the person
is eligible for each benefit).
1.
The exemption for the child.
2.
The child tax credit.
3.
Head of household filing status.
4.
The credit for child and dependent care
expenses.
5.
The exclusion from income for dependent
care benefits.
6.
The earned income credit.
The other person can’t take any of these
benefits based on this qualifying child. In other
words, you and the other person can’t agree to
divide these benefits between you. The other
person can’t take any of these tax benefits for a
child unless he or she has a different qualifying
child.” page 31 (page 30 is just a worksheet)
Hi Jan,
I have been divorced since 2013 and my ex and I are very amicable. Until 2016, I had always filed HOH and taken the dependent deduction since our son lived primarily with me and I have a higher AGI. During 2016 we deliberately made sure our son stayed more nights at his father’s home so he would be the custodial parent for filing the FAFSA. Given that I still provide the majority of financial support (medical, dental, etc) and have a higher AGI, he is willing to release the dependent exemption to me by signing the 8332. My question is what deductions will this entitle me to? Is it just the dependent deduction or does this also allow me to take the HOH deduction?
The following information was on a tax website but it seems to go against information that I am reading on your site:
“Giving the completed Form 8332 to the noncustodial parent gives up more than just an exemption. For example, additional child tax credits are only available to the person who claims the child as a dependent. It also prevents you from filing as head of household, which includes a higher standard deduction and lower tax rates on your income.”
Would you please clarify this for me so we can get this right not only for our taxes but to comply with FAFSA rules.
Thank you so much!