Dependent question

[GTS1101]

If you have separated or divorced parents and the child lives just about 50% with the other and it is basically equal custody which is very rare but sometimes happens, the parent with the higher AGI is considered the custodial parent. If the parent with the higher AGI chooses not to claim the child can the other parent be considered the custodial parent and get all of the tax benefits? Or is the parent with the higher AGI the custodial parent regardless of whether he/she claims the child?

Thanks!
GTS1101

[MilTaxEA]

The child had to live with someone more than half the year (except on leap years they technically could be 50/50). The person the child lived with more than half the year gets the custodial parent status.

If the child truly did live 50/50 that is a bad situation. No one gets HoH or EIC since the child did not live with them for more than half of the year. How often does this really happen though? The child had to live with someone for more than half the year; just be sure you can back it up with documentation on an audit.

[Edited to remove CTC]

[BP.]

If the parent with the higher AGI chooses not to claim the child can the other parent be considered the custodial parent and get all of the tax benefits?

With an 8332 from the custodial parent (considered custodial due to higher AGI, pub 17, p. 28) then the non-custodial can claim child.

[dan doshan]

No one gets HoH, EIC, or CTC

Actually one or the other would be eligible for the CTC.

[MilTaxEA]

Actually one or the other would be eligible for the CTC.

Why? I thought the child had to live with you for more than half the year based on page 230 of Pub 17.

[taxea]

If you have separated or divorced parents and the child lives just about 50% with the other and it is basically equal custody which is very rare but sometimes happens, the parent with the higher AGI is considered the custodial parent. If the parent with the higher AGI chooses not to claim the child can the other parent be considered the custodial parent and get all of the tax benefits? Or is the parent with the higher AGI the custodial parent regardless of whether he/she claims the child?

Thanks!
GTS1101

There is no "about" 50%. This is the same thing as being "almost pregnant, or dead", you either are or you arent. You need to count the nights spent with each to determine the actual time with each.
Then you determine the actual support provided to the penny for each parent. If the custodial parent is not the higher AGI but somehow provided more support that is documented then you may and I emphasize may...have an arguement for that parent taking the deduction.
If the custodial parent is the higher AGI but not the documented over 50% support parento then if, and only if, the custodial parent chooses to give the dependent status to the other parent a F8332 should be signed by that parent.

However....be sure that you stay within the regulations set forth. The IRS has made it very clear that they are stompting on trading dependents on a whim or an attempt to get EIC and other child credits.
I would just follow the rules and make your apologies to the client if it doesn't work out in his/her favor. My reasons to the clients are : If you do this you could possibibly be facing pentalties and interest should the IRS not agree with your point of view. I am not willing to jepordize my license to satisfy someone's pocketbook. If they still insist, I charge them for the work I have already done, return to them the docs they provided and send them on their way. I have no problem "firing" clients who clearly don't want to play by the rules.

[BP.]

page 230 of Pub 17.

CTC to person claiming dependency. See the same page noted above for the reference made there to the exception for the residency test for children of divorced or separated parents.

[oceanlovin'ea]

Wouldn't it just be so much easier if they would learn to say when they come in that the child lived with me more than 50% of the time? If they want to be fair people, one year dad can have the child and the next year the mom.

There are 7 days in a week. So the kid is somewhere 4 days and the other place 3 days.
It really isn't so complicated. Give them a calendar and tell them to mark where the child is every day. Then at the end of the year,they can add up the days.

Boy, I'm kind of grouchy today. Sorry. Got upset stomach and people won't leave me alone.

Linda, EA

[taxea]

Wouldn't it just be so much easier if they would learn to say when they come in that the child lived with me more than 50% of the time? If they want to be fair people, one year dad can have the child and the next year the mom.

There are 7 days in a week. So the kid is somewhere 4 days and the other place 3 days.
It really isn't so complicated. Give them a calendar and tell them to mark where the child is every day. Then at the end of the year,they can add up the days.

Boy, I'm kind of grouchy today. Sorry. Got upset stomach and people won't leave me alone.

Linda, EA

Try just a few sips of milk to settle it.

[MilTaxEA]

CTC to person claiming dependency. See the same page noted above for the reference made there to the exception for the residency test for children of divorced or separated parents.

Good point. The CTC is once again given to the parent with higher AGI. Thanks for the correction!

[AJsTax]

Nights are the ruling factor.

According to the directions from the IRS the number of nights spent in a home, including temporary absences , is the ruling factor for the custodial parent. We have a lot of courts around here that want to appoint "joint" custody of the child..No such thing in IRS rules.
I have a couple clients go so far as to keep a calendar to mark the nights. The examples given even have a situation where the children spend before and after school and all off days at the mother's home, but go to the father's every night to sleep. The father is custodial parent. If there is a tie there, I have not figured out how unless there is another house involved, then AGI comes into play, BUT only after the nights are counted.
We have been tested on this and won so far. We even mailed in copies of the calendar to the IRS and the other parent had to pay back a bunch of EIC.
Then the custodial parent has the right to give up the dependency to the other parent.
Most all of this only matters if there is a dispute.

[dan doshan]

I think some are over analyzing things ... The parent with the higher AGI only comes into play if the nites the child spends with each parent is the same. Which is very unlikely, but possible. Then the parent with the higher AGI will be considered by default to be the custodial parent. Who provides the most support is basically irrelevant. Once the custodial parent is established, that establishes who is entitled to the exemption. That parent, even if that parent only provided 10% of the support, may sign form 8332 allowing the non custodial parent to claim the exemption. Note, there are certain rules which I am assuming are being met such as one or both parents together provide over half of the childs support.

The stuff of over 6 months comes into play in connection with possible HH filing status, the EIC, and the dependent care credit. The child does not necessarily have to have lived with the parent for over 6 months to potentially be a qualifying child for the child tax credit. The child could live with one parent for 5 months and the other parent for 4 months. And, if the basic tests are met, the parent with whom the child lived for 5 months would be the custodial parent and eligible for the CTC.

Also keep in mind that in connection with a qualifying child a particular parent need not necessarily provide 1 cent in support of that child. Folks still keep mentioning providing over half of the childs support as being relevant.

The above is in connection with a qualifying child in regards to divorced or parents that were never married.