What are the rules for claiming dependents in shared custody situations?

by | Apr 24, 2025 | Filing Status & Dependents, Individual Taxes

Here’s what HIVE AI had to say about “What are the rules for claiming dependents in shared custody situations?”:

Rules for Claiming Dependents in Shared Custody Situations

When parents share custody of a child, specific tax rules determine which parent can claim the child as a dependent. These rules are designed to provide clarity in situations where both parents might otherwise attempt to claim the same child.

General Rule: The Custodial Parent

In most cases, because of the residency test, a child of divorced or separated parents is the qualifying child of the custodial parent. IRS – Publication 504: Divorced or Separated Individuals The custodial parent is the parent with whom the child lived for the greater part of the year. IRS – Publication 1819: LifeCycle: Divorce and non-custodial, separated, or never married parents IRS – Publication 1819: LifeCycle: Divorce and non-custodial, separated, or never married parents This is determined by counting the number of nights the child spends with each parent.

If there’s a question about which parent is the custodial parent, the IRS considers:

  • The parent with whom the child resided for the longest period of time during the taxable year, or
  • If the child resides with both parents for the same amount of time during the taxable year, the parent with the highest adjusted gross income. IRC § 152(c)

Exception: The Noncustodial Parent Release

The other parent is the noncustodial parent. IRS – Publication 1819: LifeCycle: Divorce and non-custodial, separated, or never married parents IRS – Publication 1819: LifeCycle: Divorce and non-custodial, separated, or never married parents Special rules apply in the case of divorced parents. Section 152(e) provides that a child may be treated as a qualifying child of the noncustodial parent rather than the custodial parent if certain criteria are met. Dawson U.S. Tax Court Opinions: Kent McCoy

For the noncustodial parent to claim the child as a dependent: (A) The custodial parent must sign a written declaration (in such manner and form as the Secretary may prescribe) that they will not claim the child as a dependent for any taxable year beginning in that calendar year, and (B) The noncustodial parent must attach this written declaration to their tax return for the taxable year. IRC § 152(e)

Form 8332 or Similar Statement

In order for the noncustodial parent to claim the child as a dependent, the custodial parent generally must provide the noncustodial parent with either Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, or a similar statement (containing the same information required by the form). IRS – Publication 1819: LifeCycle: Divorce and non-custodial, separated, or never married parents IRS – Publication 1819: LifeCycle: Divorce and non-custodial, separated, or never married parents

The declaration required by section 152(e)(2) must be made on either Form 8332 or on a statement conforming to the substance of that form. Dawson U.S. Tax Court Opinions: Stephen S. Gessic

Section 152(e)(2) provides that the special rule is available only if the custodial parent signs a written declaration (in such manner and form as the Treasury Secretary may prescribe) that such custodial parent will not claim such child as a dependent for the taxable year, and the noncustodial parent attaches this written declaration to the noncustodial parent’s return for the taxable year. The declaration required by section 152(e)(2) must be made on either Form 8332 or on a statement conforming to the substance of that form. Dawson U.S. Tax Court Opinions: John P. & Maryann Sender

Requirements for Form 8332 or Similar Statement

Form 8332 requires a taxpayer to furnish (1) the name of each child; (2) the name and Social Security number of the noncustodial parent claiming the dependency-exemption deduction; (3) the Social Security number of the custodial parent; (4) the signature of the custodial parent; (5) the date of the signature.

The release must state that:

  • The noncustodial parent can claim the child as a dependent without regard to any condition (such as payment of support).
  • The other parent won’t claim the child as a dependent.
  • The years for which the claim is released.

The noncustodial parent must attach all of the following pages from the decree or agreement:

Divorce Decrees and Separation Agreements

Divorce decrees, separation agreements, and similar instruments are complex documents that may be subject to differing interpretations governed by state law. Allowing these documents to serve as a written declaration creates complexity and uncertainty. Therefore, the regulations provide that a written declaration not on Form 8332 (or successor form) must conform to the substance of Form 8332, and further provide that a release not on a Form 8332 must be a document executed for the sole purpose of releasing the claim. The regulations provide specifically that a court order or decree or a separation agreement may not serve as the written declaration. T.D. 9408

For post-2008 divorce decrees or agreements: The decree/agreement:

  • States that the noncustodial parent can claim the child as a dependent without regard to any condition, such as the payment of support, and
  • Specifies the year or years in which the noncustodial parent can claim the child as a dependent, and
  • Is otherwise substantially similar to Form 8332, and
  • Is signed by the custodial parent to indicate that the custodial parent agrees not to claim the child as a dependent for the year.

However:

  • The noncustodial parent cannot attach pages from decree/agreement, in lieu of Form 8332.
  • The noncustodial parent must attach a Form 8332 or similar statement to their return.
  • The custodial parent must sign either Form 8332 or a similar statement whose only purpose is to release the custodial parent’s claim to the dependency exemption for the child without any conditions. IRS IRM 4.19.15 Discretionary Programs

Unconditional Release Requirement

The declaration must be an unconditional release of the custodial parent’s claim to the child as a dependent. The regulation clarifies that “A declaration is not unconditional if the custodial parent’s release of the right to claim the child as a dependent requires” certain conditions to be met. Dawson U.S. Tax Court Opinions: Michael S. Shirley

Parents Who Never Married

The special rule for divorced or separated parents also applies to parents who never married. IRS – Publication 1819: LifeCycle: Divorce and non-custodial, separated, or never married parents This means that the same rules regarding Form 8332 and the custodial parent releasing the dependency exemption apply to parents who were never married.

Shared Custody Guidance

Here are the rules that you should refer to:

Medical Expenses Exception

Any child to whom section 152(e) applies shall be treated as a dependent of both parents for purposes of medical expense deductions. IRC § 213(d) This means that even if the custodial parent releases the dependency exemption to the noncustodial parent, both parents may still claim medical expenses they paid for the child.

Multiple Support Agreements

For purposes of paragraph (1)(C), over one-half of the support of an individual for a calendar year shall be treated as received from the taxpayer if: (A) no one person contributed over one-half of such support, (B) over one-half of such support was received from 2 or more persons each of whom, but for the fact that any such person alone did not contribute over one-half of such support, would have been entitled to claim such individual as a dependent for a taxable year beginning in such calendar year, (C) the taxpayer contributed over 10 percent of such support, and (D) each person described in subparagraph (B) (other than the taxpayer) who contributed over 10 percent of such support files a written declaration (in such manner and form as the Secretary may by regulations prescribe) that such person will not claim such individual as a dependent for any taxable year beginning in such calendar year. IRC § 152(d)

When Neither Parent Claims the Child

If the parents of an individual may claim such individual as a qualifying child but no parent so claims the individual, such individual may be claimed as the qualifying child of another taxpayer but only if the adjusted gross income of such taxpayer is higher than the highest adjusted gross income of any parent of the individual. IRC § 152(c)

If an individual may be claimed as a dependent by more than one taxpayer in the same calendar year, the taxpayer who properly claims the individual as a dependent for the taxable year is liable for the shared responsibility payment attributable to the individual. If more than one taxpayer may claim an individual as a dependent in the same calendar year but no one claims the individual as a dependent, the taxpayer with priority under the rules of section 152 to claim the individual as a dependent is liable for the shared responsibility payment for the individual. Tresuary Reg. 1.5000A-1

Documentation Requirements

If there’s a dispute about who can claim a dependent, the IRS may request documentation:

For Dependents who live with you:

  • A copy of the birth certificate and social security card for each person claimed.
  • School, medical, or other records to determine the place of residence of each person claimed as a dependent.
  • A record of income or other record of support received for each person claimed as a dependent, including wages, payments from social service agencies, Social Security, V.A. benefits, and child support.
  • A record of amounts contributed to household expenses by each person living in the household with the person claimed as a dependent.
  • If you were divorced or legally separated, a complete copy of your divorce decree, decree of separate maintenance, written separation agreement, or any other written agreement, relating to custody or the dependency exemption, including any relevant modifications. IRS IRM 4.10.10 Standard Paragraphs and Explanation of Adjustments

Conclusion

The rules for claiming dependents in shared custody situations are designed to provide clarity and prevent both parents from claiming the same child. Generally, the custodial parent (with whom the child lives for more than half the year) has the right to claim the child as a dependent. However, this right can be transferred to the noncustodial parent through a properly executed Form 8332 or similar statement.

It’s important to follow these rules carefully to avoid conflicts with the IRS or the other parent. When in doubt, consult with a tax professional who can provide guidance specific to your situation.

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