Question

An unmarried couple split with a 50/50 custody agreement stating that every other year the parent may claim the one child as a dependent. One parent makes 80K a year and the other makes 23K a year. Does a custody agreement prevent the lower earner from claiming child tax credit or earned income credit? Explain your answer.

Answer 1

As per the IRS rules Of child Tax credit and Earned Income Credit only one parent can take the claim , As there are Rules set by IRS for claiming the Qualifying child dependent

1- The child should live with the parent for more than half of the year

2- The Parent should provide Half of the support for the child

If the  parents have the custodial agreement which means parents whether married filling separately return or unmarried get in agreement Then first rules which comes is parents with whom child live more in a year and when they have 50/50 custodial rule which means in 365 days half of time child life with one parent ,another half with other but this rules make one parent number of days more than other so parents have to mutually decide who will take the credit ,if both disagrees then comes

The Income Tie break rule

Then As per IRS  Rules Parent who are having more Adjustable Gross Income will be eligible for claiming the credit .

In the Given Case one parent makes 80K and another 23 K , The custody agreement doesn't stop the lower earner to claim child tax credit as custodial agreement is arrangement of the parents but not of IRS rules .

If IRS rules comes in play child living with more number of days will take credit and this rules vanishes if they have 50/50 custodial agreement and one parent can file Form 8332 for surrending the claim ,

But when there is disagreement then Income Tie break rule comes which specifies the parent with Lower AGI can't claim child tax credit or earned credit.

So due to custodial agreement The lower income parent is not restricted to claim credit .