Tax season is rapidly approaching. For parents not filing taxes together, it is always best to speak with your tax advisor about the proper rules and filings. The tax code can be complicated and changes from year to year. However, there are general rules to keep in mind on who claims a child on their tax returns.
Only one parent can claim a child
A “qualifying child” can only be claimed on one of the parent’s tax returns. A “Qualifying child” must meet the IRS tests, which include age, relationship, residency, and return filing.
A qualifying child is any child who is any one of the following items:
- Any age and permanently and totally disabled
- Under the age of 19
- A full-time student (for at least 5 months) and under age 24
The qualifying child can be your child, including step, adopted or foster, sibling, grandchild, niece, or nephew. They must live with you for more than half of the year. The Qualifying Child cannot file a joint tax return with another person. However, they can file a joint tax return to get a tax refund. For example, a child works a part-time job and files a tax return to get a refund.
Parents who claim a child on their separate returns will have issues. The IRS will delay the return process while determining who claims the child. The IRS review can result in a rejected tax return.
Primary Custodial Parent Claims
The general rule is that the parent the child lives with for the greatest number of nights a year gets to claim the child on the taxes (residency rule). A parent claims a night when 1) the child sleeps at the parent’s home, regardless of whether that parent is present, or 2) the child is in the company of the parent outside of that parent’s home (i.e., in a hotel on vacation).
If a child is away from home and not with either parent, such as going to a sleep-away camp in the summer or spending the night at a friend’s house, the IRS would look at what a typical custody schedule would be if the child did not attend camp. If a parent usually would have the child that night, then that parent claims the night.
However, the court can change this claim by the agreement of both parents. In exceptional cases, the court can change the order for a non-custodial parent to receive the tax claim.
Who claims child on taxes with 50/50 custody?
If the parents share an equal number of nights a year, then the parent with the higher adjusted gross income (AGI) claims the child. A parent should only have this issue in leap years or during the divorce process as a Leap year has 366 days, whereas non-leap years have 365 days. Only in Leap year or during the divorce process can parents have truly equal parenting time per the residency rule. The California tax code for qualifying minors also mirrors (is precisely the same as) the federal tax code.
Can a California Court Order grant a Parent the right to claim a child?
Most California Courts will not order anything different than the IRS tax code unless the parties agree in writing. However, the California Courts have some discretion to order the non-custodial parent to receive the dependency exemption and order the custodial parent to complete necessary waiver paperwork. The Court may apply this discretion in situations where the parenting time is essentially equal or one party receives an increase in support in exchange for other parent to claim exemption. (See Monterey County v. Carnejo (1991) 53 Cal.3d 1271; Rios v. Pulido, 100 Cal.App.4th 359 (Cal. App. 2002)).
If the divorce decree is after 2008, the parties must execute the IRS form (current IRS Form 8332) for the custodial parent to relinquish the exemption, whereas pre-2008 part of judgment or order may be enough. If the proper wavier form is not completed, the IRS will give the claim to the custodial parents. The waiver needs to be filed at least a year in advance for it to be used on the current tax year. The California tax board will typically enforce the form 8332 designation.
For help figuring out the best strategy to deal with tax exemption in your family law case, please contact us for a quick consultation.
CITES
- https://www.irs.gov/pub/irs-pdf/p501.pdf
- https://www.ftb.ca.gov/tax-pros/law/legal-rulings/1993-3.html
- https://www.ftb.ca.gov/forms/2018/18-1540.html
- Monterey County v. Carnejo (1991) 53 Cal.3d 1271
- Rios v. Pulido, 122 Cal.Rptr.2d 501, 100 Cal.App.4th 359 (Cal. App. 2002)
- Brown v. Gray, B329897 (Cal. App. Jun 27, 2024)
- D.B. v. F.M., B249778 (Cal. App. Jan 23, 2015)