One topic frequently negotiated in child custody and child support cases is who will claim the exemption for the child on their tax return. Parties will often negotiate into their family law agreements that the parents will alternate claiming a child every year. However, there are certain requirements that must be met in order to claim the child. Typically, the parent who has the child more overnights is defined by the IRS as the custodial parent and therefore is the party eligible to claim the exemption for the child.
However, it has become increasingly popular for parents to adopt equal overnight timesharing schedules with the children. In such situations, neither of the parents are typically designated as a custodial parent. For parents who have equal timesharing, according to IRS regulations, the parent who has the higher adjusted gross income (AGI) is the parent designated as the custodial parent and is therefore entitled to claim the child as a dependent. Sorting out the child exemption on taxes is an important part to resolving your divorce or paternity case.