Understanding the IRS Tie-Breaker Rules for Dependents

When it comes to claiming dependents on a tax return, multiple people sometimes qualify to claim the same child. This can happen in situations like divorced or separated parents, grandparents helping raise grandchildren, or other shared custody arrangements. The IRS has specific tie-breaker rules to determine who gets to claim the dependent when more than one person qualifies. Understanding these rules is essential to avoid audits, penalties, or delayed refunds.

Who Qualifies to Claim a Dependent?

The IRS allows taxpayers to claim dependents if they meet certain relationship, residency, and support criteria. A dependent can be a qualifying child or a qualifying relative, but for this blog, we’ll focus on qualifying children, as that’s where most disputes arise.

To claim a qualifying child, the dependent must:

✅ Be the taxpayer’s child, stepchild, foster child, sibling, step-sibling, or a descendant of any of these.

✅ Be under age 19 (or under 24 if a full-time student).

✅ Live with the taxpayer for more than half the year.

✅ Not provide more than half of their own financial support.

✅ Not be claimed by another taxpayer unless IRS tie-breaker rules apply.

When Two People Try to Claim the Same Child

The IRS allows only one person to claim a child as a dependent per tax year. If more than one person qualifies, the IRS applies these tie-breaker rules in the following order:

1. Parent Over Non-Parent

If a parent and a non-parent (such as a grandparent, aunt, or uncle) both attempt to claim the same child, the parent gets priority—even if the child lived with the non-parent longer during the year.

2. The Parent With Whom the Child Lived the Longest

If the child lived with both parents but not equally, the parent who had the child for more nights during the year gets to claim them.

3. The Parent With the Higher AGI (Adjusted Gross Income)

If the child lived with both parents equally (e.g., perfect 50/50 custody split), the IRS allows the parent with the higher AGI to claim the child.

4. Non-Parent With the Highest AGI

If no parent claims the child, the IRS allows a non-parent to claim them—but only if that person’s AGI is higher than either parent’s AGI.

Common Situations Where the Tie-Breaker Rules Apply

Divorced or Separated Parents

A common dispute arises when both parents claim the child despite a custody agreement. Typically, the custodial parent (who has the child most of the time) claims the dependent. However, the custodial parent can release the claim to the non-custodial parent using IRS Form 8332. If no agreement exists, the tie-breaker rules apply.

Unmarried Parents Living Together

If both parents live together but are unmarried, only one can claim the child. If they can’t agree, the higher-earning parent wins under the AGI rule.

Grandparents or Other Relatives

If a grandparent or relative provides most of the child’s care, they can only claim the child if neither parent qualifies or chooses to claim them, and the grandparent’s AGI is higher than either parent’s.

How to Avoid IRS Issues

✔ Communicate: If there’s a dispute, discuss with the other potential claimant before filing.

✔ Document Custody: Keep custody agreements and proof of where the child lived.

✔ Use Form 8332: If the custodial parent agrees to let the other parent claim the child, file Form 8332.

✔ File Correctly: If the IRS detects duplicate claims, they may delay refunds or require proof of eligibility.

Final Thoughts

Claiming a dependent can lead to significant tax benefits, but only one taxpayer can claim a child each year. If there’s a dispute, the IRS will apply tie-breaker rules to determine eligibility. To avoid complications, it's best to understand these rules and plan ahead before filing your taxes.

Need help determining who should claim a dependent on your return? Contact us today for a tax consultation!