Who gets to claim the child as a tax deduction?
The IRS has rules about which parent can claim the child as a tax deduction in a given year. Usually, it’s the parent with whom the child primarily resides because that parent usually pays more than 51% of the cost to raise the child (taking into account the portion of overall household expenses attributable to the child). State law does permit the parents to alternative years claiming the child or splitting the exemption if there are more than one child. If the parent paying child support wants to take the deduction, the trend is to have that parent “buy” the tax exemption, i.e., prepare two tax returns for the parent with primary physical custody, and determine the difference to the custodial parent of claiming the child versus not claiming the child. The parent wanting to get the deduction would then have to pay the custodial parent for the lost benefit. Note, too, that only the parent claiming the child as a dependent in a given year can get the day-care credit for that year.
