There are many circumstances where two or more taxpayers would claim a dependent as a qualifying child in the same year. This is very common amongst divorced or separated couples and many times none of the separated couples communicate with the other as to who is claiming the dependent child on their respective tax return,
Thus, the IRS has to be the adjucator on this one and they generally use the following tie-breaker tests to determine which taxpayer is eligible to claim the dependent. The IRS uses the tie-breaker tests that are listed below in order of priority. The IRS would assign the dependent care deduction for the qualifying child to:
1. first and foremost to the parent of the child,
2. the parent with whom the child lived for the longest time during the tax year,
3. the parent with the highest adjusted gross income,assuming the child spent an equal amount with each parent.
It is important that the parent wishing to take advantage of the both the child's exemption and the child tax credit, the taxpayer/parent should take in consideration the following requirements;
1. be ready to submit documentation to the IRS to support your claim.
2. maintaining a log of where the dependent child spends the night.
3. as stated above, if the child spends exactly the same amount of time with each parents, the parent with the higher income will be generally be able to claim the dependent.
4. a non-qualifying parent may only be able claim the dependent provided the qualifying parent releases his or her claim to the dependency exemption. This can be done by using IRS Form 8332, Release of Claim to Exemption for Child of Divorced or Separated Parents.
The parent may indicate on this form "for which year or years he or she agrees to release the exemption, and it is worth noting that the parent can also revoke the release if that parent later changes their mind."