Unless you and your spouse file a joint return, a dependency exemption for a qualifying child can only be claimed by one spouse. Generally, the custodial parent is the one who can claim the qualifying child as their dependent.
The custodial parent is the parent with whom the child lived for the greater number of nights during the tax year. If the child was with each parent for an equal number of nights, the custodial parent is the parent with the higher adjusted gross income.
If you are the custodial parent of a qualifying child and agree to release your claim to an exemption for that child, the child’s other parent (the noncustodial parent) may claim the child as a dependent and as a qualifying child for the Child Tax Credit. You may still claim the Child and Dependent Care Credit for the care expenses you paid for that child.
A noncustodial parent may not claim:
- Head of Household filing status
- the Earned Income Credit
- the Child and Dependent Care Credit
- the exclusion for dependent care benefits, or
- the Health Coverage Tax Credit.