Dependent Tie Breaker Rules

[Sparky]

I understand the tie breaker rules when there is one dependent living with two unmarried biological parents all year- (dependent goes to highest AGI)
When there are two children (same as above) each parent could take one and claim all six benefits or do both dependents have to go with highest AGI?

[thomtax]

Not completely

Actually, the rule is that whichever parent the child spends more nights with is the one that is allowed the deduction. It is very rare that these will be identical since there are 365 nights in a year. Only in the rare instance that these are equal, does the AGI come into play. Otherwise, there will need to be a release signed by the other parent to claim.

LT

[solomon]

§152(c)(4)

(B) More than 1 parent claiming qualifying child

If the parents claiming any qualifying child do not file a joint return together, such child shall be treated as the qualifying child of—

(i) the parent with whom the child resided for the longest period of time during the taxable year, or

(ii) if the child resides with both parents for the same amount of time during such taxable year, the parent with the highest adjusted gross income.

Note that the above applies when more than one parent is claiming the same child. Each parent can claim a child in the original post. No 8332 is required.

[dtlee]

Totally agree with Solomon.

If the children are qualifying children of both parents, the tiebreaker rules are applied only if both parents the same child. The IRS will apply that rule.

The rules were changed so that preparers applied rules when the children were Qualifying Children of other people in the household as well (siblings, grandparents, aunts, uncles, etc).

However I would not expect that both parents living together could each claim Head of Household. If they claim that each shared exactly evenly, then neither can claim Head of Household. Otherwise, it would be at most one.

[FEDUKE404]

However

Actually, the rule is that whichever parent the child spends more nights with is the one that is allowed the deduction. It is very rare that these will be identical since there are 365 nights in a year. Only in the rare instance that these are equal, does the AGI come into play. Otherwise, there will need to be a release signed by the other parent to claim.

LT

There's always leap year.......

[Jiggers]

Two kids

Two kids, equal time with each.

Divorce decree says pop gets to claim kid 1, mom gets to claim kid 2.

Using a calendar, with 365 days, obviously it can't be equal.

Mom has higher income.

Does Divorce Decree trump the IRS?

Or does the pop have to get the form signed by mom?

[BP.]

Does Divorce Decree trump the IRS?

Or does the pop have to get the form signed by mom?

Have a look at TTB 3-15.

[luke]

Op

didnt OP say that dependent lived with both (as in together in same household with)??

[dtlee]

Two kids, equal time with each.

Divorce decree says pop gets to claim kid 1, mom gets to claim kid 2.

Using a calendar, with 365 days, obviously it can't be equal.

Mom has higher income.

Does Divorce Decree trump the IRS?

Or does the pop have to get the form signed by mom?

Jiggers,

IRS is allowed to give a dependent to the higher AGI if both claim the child. However, if they see that they are both at different addresses, they will start asking for proof of where the child resides because that will determine who is the custodial parent (and that would eliminate any claim based on AGI). You should try to avoid that if possible and reduce the number of parents claiming any one child down to 1 if they can agree.

• One has to have more nights of custody. The regulations have detailed examples of how to compute this. If neither has more than half the year, I would suggest that they keep counting until they agree on this. It is wholly possible for each child to be with a different parent more than half the year, in which case that parent claims that child without regard to Form 8332 (or AGI). (You can read into this what you want.)
• If Parent A is the custodial parent of the child who is by decree supposed to be claimed by Parent B, then Parent A must (based on the divorce decree) complete and sign Form 8332 for Parent B. If he/she refuses, Parent B will need to call his/her attorney's office and start taking action to get a completed and signed Form 8332 provided by Parent A. The IRS does not want to get involved. However, if the divorce decree includes everything that would have been on Form 8332, the IRS indicates that they will accept that in lieu of Form 8332. (The IRS realizes that most divorce decrees do not provide Social Security Numbers and thus, they rarely expect this option to be used.)

AGI should not be part of the equation based on what you posted.

[Jiggers]

Jiggers,

IRS is allowed to give a dependent to the higher AGI if both claim the child. However, if they see that they are both at different addresses, they will start asking for proof of where the child resides because that will determine who is the custodial parent (and that would eliminate any claim based on AGI). You should try to avoid that if possible and reduce the number of parents claiming any one child down to 1 if they can agree.

• One has to have more nights of custody. The regulations have detailed examples of how to compute this. If neither has more than half the year, I would suggest that they keep counting until they agree on this. It is wholly possible for each child to be with a different parent more than half the year, in which case that parent claims that child without regard to Form 8332 (or AGI). (You can read into this what you want.)
• If Parent A is the custodial parent of the child who is by decree supposed to be claimed by Parent B, then Parent A must (based on the divorce decree) complete and sign Form 8332 for Parent B. If he/she refuses, Parent B will need to call his/her attorney's office and start taking action to get a completed and signed Form 8332 provided by Parent A. The IRS does not want to get involved. However, if the divorce decree includes everything that would have been on Form 8332, the IRS indicates that they will accept that in lieu of Form 8332. (The IRS realizes that most divorce decrees do not provide Social Security Numbers and thus, they rarely expect this option to be used.)

AGI should not be part of the equation based on what you posted.

The kids swap homes every Friday.
Friday 1/7/11 dad picks up kids and keeps until Friday 1/14/11.
Friday 1/14/11 mom gets the kids until Friday 1/21/11.

They have joint custody.

The week that the dad gets the kids, he pays the child care on Monday for both kids.
The following week mom pays the child care on Monday for both kids.

What to do, what to do?

[Sparky]

Dependent Tie Breaker Rules

These kids live 365 days with both unmarried parents; Can they each have a kid and get all six benefits (HOH, EIC, Child Tax Credit, etc.) or does the highest AGI have to take both?

[dtlee]

You did not like my answer, but I did.....

These kids live 365 days with both unmarried parents; Can they each have a kid and get all six benefits (HOH, EIC, Child Tax Credit, etc.) or does the highest AGI have to take both?

....I would not expect that both parents living together could each claim Head of Household. If they claim that each shared exactly evenly, then neither can claim Head of Household. Otherwise, it would be at most one.

Here are the five benefits I am discussing based on what I know:

• Dependency
• Head of Household
• Chid Care Credit
• Child Tax Credit
• Earned Income Credit

Based on my understanding of your question, it is conceivable that they could (under the right circumstances) both be eligible for 4 of the 5 benefits I am aware of. I cannot be convinced that they could ever both claim Head of Household.

Please clarify what the 6th benefit is, since I have not addressed that.

[Sparky]

Sorry busy day; your right two could not claim HOH living in same house which means only highest AGI would claim all.
The Tax Book lists The exclusion for dependent care benefits, as the sixth.

[dtlee]

Sorry busy day; your right two could not claim HOH living in same house which means only highest AGI would claim all.
The Tax Book lists The exclusion for dependent care benefits, as the sixth.

Thanks. Yes, that can be considered a 6th item, I forgot that, but I think it follows the child care credit rules.

Highest AGI does not have anything to do with this unless you have dueling tax returns where both parents list the same dependent.

Are both parents planning to claim the same child?

[dtlee]

didnt OP say that dependent lived with both (as in together in same household with)??

Yes. We are sadly attempting to address two different scenarios in this thread.