Considering the complexities of tax filing, married couples opting for a joint return often face questions about who claims dependents. This decision can significantly influence tax benefits and liabilities, making it crucial to understand the intricacies involved.
Eligibility Criteria for Claiming Children
When married couples file jointly, determining who claims the children as dependents involves meeting specific IRS eligibility criteria. The relationship test ensures the child must be a son, daughter, stepchild, foster child, sibling, step-sibling, or their descendant, establishing a direct familial connection. 1Internal Revenue Service. Child Tax Credit
Age is another key factor. The IRS requires the child to be under 17 at the end of the tax year, or any age if permanently and totally disabled. This criterion determines eligibility for tax credits like the Child Tax Credit, which can reduce tax liability.
The residency test stipulates that the child must have lived with the taxpayer for more than half the tax year, with exceptions for temporary absences due to education or medical care. Additionally, the taxpayer must provide more than half of the child’s financial support, covering housing, food, and education.
Combining Child-Related Credits
Filing jointly allows couples to maximize child-related tax credits. For tax year 2025, the Child Tax Credit (CTC) is worth up to $2,200 per qualifying child under 17, and up to $1,700 of the credit can be refundable through the Additional Child Tax Credit (ACTC). The phase-out for the CTC begins at $400,000 of modified adjusted gross income for married couples filing jointly. 2Internal Revenue Service. Child Tax Credit
The Additional Child Tax Credit (ACTC) supports families who may not owe enough taxes to claim the full CTC. This refundable credit provides financial relief even when tax liability is minimal.
The Earned Income Tax Credit (EITC) assists low-to-moderate-income earners by reducing tax liability or increasing refunds. For 2025, a married couple with three or more qualifying children can receive a maximum EITC of $8,046. 3Internal Revenue Service. Internal Revenue Bulletin 2024-45 (2025 EITC and ACTC Inflation Adjustments)
Impact of Shared Custody Arrangements
Shared custody arrangements can complicate dependent claims. The IRS generally allows the custodial parent, with whom the child resides for most of the year, to claim the child as a dependent. However, the noncustodial parent may claim the child for certain benefits if the custodial parent signs Form 8332 and the noncustodial parent attaches it to their tax return; in that case, the noncustodial parent can claim the child as a dependent for purposes of the Child Tax Credit/Credit for Other Dependents, but not for the Earned Income Tax Credit, head of household status, or the child and dependent care credit. 4Internal Revenue Service. Dependents FAQ: Divorced or Separated Parents
Although the Tax Cuts and Jobs Act of 2017 eliminated personal exemptions, allocating other tax benefits remains a point of negotiation between parents. Both parties must evaluate their financial situations to determine the most beneficial arrangement. Health coverage reporting and any premium tax credit considerations follow the tax household that claims the child for the year. There’s no federal shared responsibility payment (penalty) in effect, though some states have their own coverage requirements.
Recordkeeping for Tax Purposes
Maintaining organized records is critical for successful tax filing and financial management for married couples filing jointly. Accurate documentation of income, expenses, and deductions simplifies tax preparation, ensures compliance with IRS requirements, and protects against audits. Retaining W-2 forms, 1099s, and other income statements confirms earnings, while receipts and statements for deductible expenses substantiate claims.
Digital tools like QuickBooks or TurboTax streamline recordkeeping by tracking expenses, managing receipts, and syncing financial data. These tools simplify compiling documentation during tax season, aid in forecasting tax liabilities, and assist in planning estimated payments, improving financial management and minimizing surprises.