Understanding Claiming Children As A Dependent

It is an unfortunate reality that income taxes need to be completed each year. Both federal and state taxes need to be filed. If you are confused about your taxes or completing them for the first time, then it is wise to speak with an accountant or tax professional who can assist you. If you want to do your taxes yourself, then you should try to avoid some common mistakes that some individuals make. If you are the parent of a child, but are not currently married to the father, then you and the other parent may both claim your son or daughter. Keep reading to learn why this is a mistake and what you should do if two people claim a child as a deduction.

Why Cannot Both Parents Claim A Child?

Claiming a child on a tax document means that you are stating that the child is your dependent. There are certain rules, according to the IRS, that dictate who is and who is not your legal dependent. A child is legally a dependent if they live with you, are financially supported by you, related to you, and under the age of 19. Also, the child should not be claimed as a dependent by anyone else. 

While these rules are clear about dependents, a child can obviously fall into the category of dependent for both parents. Dependents can reduce your taxable income by several thousand dollars. This means it is advantageous for you to claim your child on your taxes. It is also advantageous for the other parent to do so as well. If there is no formal agreement, then you can see how a child can be claimed twice, but this is not allowed by the IRS. Basically, the IRS wants the person who has most financial burden to claim the child as a dependent. The IRS sets it up this way so you get a bit of tax relief for having to pay so much to care for your child over the last year. 

What Happens When Both Parents Claim A Child?

If both parents claim a child as a dependent, then the IRS will settle the matter through an investigation. The first person to claim the child will be able to e-file. If you try to also e-file and someone has already claimed your child, then you will need to file your taxes the traditional way, through the mail. Keep this in mind. It does not mean that the first person to file automatically gets the deduction. The IRS will note that two people have claimed the same individual as a dependent and this will trigger an investigation.

Both returns will be considered and you will likely be contacted to explain the situation. Once the qualifying parent is identified, their tax returns will be processed and filed. The other parent will need to amend their tax forms and remove the dependent claim on the taxes.