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50/50 child custody and tax issues

On Behalf of | Jun 6, 2023 | Family Law |

In Texas, when parents have equal custody of their child, the question arises of who can rightfully claim their child as a dependent on an income tax return. The Internal Revenue Service (IRS) has spelled out specific rules determining which parent can claim the child on their taxes. Understanding these rules can help parents during their tax planning and ensure proper compliance.

Qualifying child or relative

To claim your kid as a dependent, the IRS requires that they meet specific criteria, including an age limit, residency and financial support. If an individual does not meet the qualifying child criteria, they might satisfy the qualifying relative requirements, which include residency and familial relationship tests. Once you understand the IRS guidelines, you can determine your eligibility to claim a child as your dependent.

Rights of the custodial parent

According to IRS rules, a child’s custodial parent who has physical custody of their kid for the majority of the tax year has a right to claim the child as their dependent in most cases. When a couple has 50/50 child custody of the child, and both parents spend equal time with their offspring, the IRS has a rule called a tiebreaker. Whichever parent has the child for more nights during a calendar year, which would be 183 days and nights, typically receives the right to claim the child as a dependent.

Tiebreaker using AGI

If parents determine that they have each had the child for precisely 182.5 days or exactly half of the year, the IRS has another tiebreaker rule. Whichever parent shows the highest adjusted gross income (AGI) on their tax return is granted the right to claim the child as their dependent. Since an individual’s AGI can differ yearly, the parent who can rightfully claim the child may be different each year.

Parental agreement

The IRS dictates which parent gets the right to claim a child on their taxes when they have 50/50 custody. However, in a 50/50 custody scenario, parents can reach their own agreement, such as deciding to alternate years. For families that have multiple kids, the parents can choose to divide the dependents equally. These arrangements can be formalized in a separation agreement, divorce decree or other written document to avoid potential disputes.

Understanding the IRS rules can help parents decide who can rightfully claim their child as a dependent on their taxes. By following the guidelines, co-parents can navigate the tax regulations and avoid tax audits or disputes.