As the tax filing deadline approaches, unmarried individuals with a minor child in Maryland must consider who can take the exemption for the child. The IRS has rules regarding who can claim the child, so without communication between the parents, one party risks having a return rejected.
Despite recent federal tax law changes, there is still an advantage to claiming a minor child as a dependent. The Child Tax Credit has doubled under the new laws. The Dependent Care Credit remains available for those who have daycare expenses. Finally, the difference in the standard deduction between single and head of household is $6,000 for 2018. Without a qualifying dependent, a person cannot claim head of household.
As a practical matter, the IRS will normally accept the return of the parent who files taxes first. If the other parent files later and claims the same children, the IRS will reject the return. Though this method may be overturned if the other parent was in error, it can be a long process to correct. Where no agreement was made, the IRS will look to where the child has lived for a longer portion of the year. If the living period is relatively equal, it will side with the parent with the higher adjusted gross income.
The easiest method, by far, is to reach an agreement before taxes are filed. Most family law attorneys will recommend some type of agreement. The divorce decree, custody order or support order can specify which party is entitled to claim the child or children. In the case of multiple children, parents often split the exemptions. The IRS has a form for such situations. It is IRS form 8332, Release or Revocation of Release of Claim to Exemption for Child by Custodial Parent. The form can be used for more than one tax year; it does not need to be signed every year.