Say hypothetically two separately living coparents agree that each year they will take turns filing HOH, claiming the dependent and the child tax credit, while the other files single with no dependents that year. We don’t have quite 50/50 custody but it is close, and we are trying to figure out the fairest way to file. Is this allowed by the IRS? Would they question whether or not the child is truly spending more nights with each parent every other year?
You need to ensure that the parent claiming HOH has more nights with the child for the year and has a record of this. The IRS does care about the number of nights in case of an audit.
Ash said:
You need to ensure that the parent claiming HOH has more nights with the child for the year and has a record of this. The IRS does care about the number of nights in case of an audit.
That’s what I was wondering. I am always going to technically have the child for more nights each year just based upon logistics, but not by many nights. I want my co-parent to benefit from claiming HOH every other year. As long as we agree to this and do it consistently, would the IRS consider this suspicious over time?
@Aki
This would be against the rules. You can transfer the Child Tax Credit (CTC) to the non-custodial parent every other year without breaking the rules. If you want your co-parent to benefit from claiming HOH, you can just give them the money saved by filing as HOH.
@Aki
It might be simpler for you to always file as HOH if you have more nights, and just pay the other parent an agreed amount if fairness is a concern.
Assuming you’re not married, this wouldn’t be a red flag. You can claim HOH even without claiming the dependent as long as you meet the criteria (paying at least half the costs of the home and having the child for at least 6 months and 1 day). If audited, you’d have to prove you had the child for more than half the year.
No, this is a common arrangement in custody agreements. Make sure the parent who is the legal custodial parent signs Form 8332 to release the claim for the child for that year. IRS Form 8332
@Kim
They wouldn’t need Form 8332 for this setup where the custodial parent alternates each year. If they did, they wouldn’t be able to alternate filing as HOH.
Not a red flag. Parental cooperation is a good thing. A red flag arises when you’re fighting over it, with one parent claiming every year and the other filing on paper. That would involve the IRS sorting it out.
The parent who doesn’t have over 50% custody can file as long as the other parent files the necessary form (Form 8332?). It’s not a red flag; this arrangement happens frequently.
I wouldn’t alternate the HOH filing status unless the child is actually alternating where they spend their time each year. It’s a specific rule.