Navigating child custody arrangements can be challenging, especially regarding tax implications. A common question among divorced or separated parents in Colorado is: Who gets to claim the child on their taxes? Since claiming a dependent can provide valuable tax benefits, including the Child Tax Credit, understanding the Internal Revenue Service (IRS) rules is essential.
For parents with shared custody in Colorado, the rules governing who can claim a child on their tax return depend on multiple factors, including court orders, IRS guidelines, and agreements between the parents. If you are in a custody dispute or need legal guidance, a Denver child custody lawyer can help protect your parental rights.
IRS Rules on Claiming a Dependent Child
The IRS uses specific criteria to determine which parent can claim a child as a dependent. These rules apply even if parents share custody or have equal parenting time. The IRS follows a “tie-breaker” rule, which prioritizes eligibility based on the following factors:
- Primary Residency: The parent with whom the child lived for more than half the year is generally entitled to claim the child as a dependent.
- Adjusted Gross Income (AGI): If the child lived with both parents for an equal amount of time, the parent with the higher AGI has the right to claim the child.
- Written Agreement: If both parents agree, the non-custodial parent may claim the child by obtaining a signed IRS Form 8332 from the custodial parent.
- Court Order: In some cases, a court order may specify which parent can claim the child for tax purposes.
Understanding the Custodial vs. Non-Custodial Parent
For tax purposes, the custodial parent is the one with whom the child resides most of the year. Even in joint custody arrangements, the IRS still requires a determination of primary residency.
The non-custodial parent can claim the child as a dependent only if the custodial parent signs IRS Form 8332, releasing the claim to the exemption. This form must be attached to the non-custodial parent’s tax return each year they wish to claim the child.
Tax Benefits for Claiming a Child
Parents who claim a child as a dependent may be eligible for several tax benefits, including:
- Child Tax Credit – A credit of up to $2,000 per child for qualified taxpayers.
- Earned Income Tax Credit (EITC) – Available only to the custodial parent if they meet income requirements.
- Head of Household Filing Status – Provides a lower tax rate and a higher standard deduction.
- Child and Dependent Care Credit – Can be claimed by the custodial parent for work-related child care expenses.
How to Determine Who Claims the Child
If both parents attempt to claim the child, the IRS will automatically apply the tie-breaker rule, giving the tax benefits to the parent with whom the child lived longer or the one with the higher AGI if custody time is equal.
Parents should discuss tax filing arrangements ahead of time to avoid IRS disputes and penalties and include tax-related provisions in their Colorado parenting plan or divorce agreement.
Can Parents Alternate Claiming a Child?
Yes, parents can alternately claim the child each year, but this must be specified in a legally binding agreement. Some Colorado divorce settlements include tax arrangements, allowing parents to switch tax years or assign specific benefits. If parents agree to alternately claim the child, the custodial parent must complete IRS Form 8332 in the applicable tax year.
Example of an Alternating Agreement
- Parent A claims the child in even-numbered years (e.g., 2024, 2026, 2028).
- Parent B claims the child in odd-numbered years (e.g., 2025, 2027, 2029).
This arrangement helps ensure that both parents benefit from tax credits over time.
What Happens If Both Parents Claim the Child?
If both parents file tax returns claiming the same child, the IRS will reject one of the returns. The IRS will likely flag the duplicate claim and require both parents to provide evidence of eligibility. If neither parent voluntarily amends their return, an IRS audit or further legal action may follow.
It is best to clarify tax arrangements in court orders, mediation agreements, or legal settlements to avoid tax disputes.
How Colorado Courts Address Tax Claims in Custody Cases
In Colorado, family courts may include tax claim provisions in custody rulings. If parents disagree, a judge may allocate tax benefits based on:
- Parenting time allocation
- Income levels of both parents
- Financial support contributions
- Best interests of the child
If no court order or agreement exists, the IRS rules will govern who can claim the child.
Tips for Avoiding Tax Disputes in Shared Custody
- Include tax agreements in divorce decrees or parenting plans.
- Communicate with the other parent before filing tax returns.
- Use IRS Form 8332 if the custodial parent allows the non-custodial parent to claim the child.
- Keep records of custody schedules, court orders, and agreements.
- Consult a family law attorney to ensure legal compliance.
Contact a Denver Child Custody Lawyer
Tax-related custody disputes can be complex, and misunderstandings can lead to financial penalties or IRS audits. If you are unsure about your rights in a shared custody arrangement, Baker Law Group can provide legal guidance tailored to your situation.
Our Denver child custody lawyers help parents navigate custody agreements, tax filing disputes, and court-ordered arrangements. Contact Baker Law Group today to schedule a consultation if you need assistance ensuring compliance with Colorado child custody and tax laws.
