Saturday, December 22, 2012

Who has the the right to claim a child on on tax return if the child is taken care of by more than one person?

  I ran across this tax issue quite frequently last tax year.  I had a tax client say he took care of his son all tax year and the son lived with him most of the tax year. He says  his ex -wife does not even work but somehow she managed to file taxes and claim the child despite their agreement.
 A college friend of mine called me , the mother of his children claimed both the children. He and the mother of their children have a court-ordered split custody arrangement, the children live with her six months and live with him the the other six months of the year. He pays majority of the children expenses.

 I asked him who makes the money , he said he does.  If the children live with both parents an equal amount of time, the person with the highest AGI (Adjusted Gross Income) has the right to claim the children as qualifying dependents. Therefore, he has the right to claim the children. Unfortunately, the children's mother already filed a tax return, he cannot e-file.  He will  have to mail a paper tax return to the IRS.

The  IRS applies the tax-breaker rule when more than one person claims the same individual. My college friend would receive for the tax benefits of claiming the qualifying dependent  since he is the children's parent, the children lived with him six months out the year, and he has the higher AGI. If the mother already received the money, she will get audited and will owe the IRS the tax money back.

Refer to Tie-Breaker Rules below.

Only one person can use the same qualifying child.
Under the Tiebreaker Rule, the Child is Treated as a Qualifying Child Only By:
• The parents, if they file a joint return;
•The parent, if only one of the persons is the child's parent;
•The parent with whom the child lived the longest during the tax year, if two of the persons are the child's parent and they do not file a joint return together;
•The parent with the highest adjusted gross income (AGI) if the child lived with each parent for the same amount of time during the tax years, and they do not file a joint return together;
•The person with the highest AGI, if no parent can claim the child as a qualifying child; or
•A person with the higher AGI than any parent who can claim the child as a qualifying child but does not. (

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