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When a Child Is a Dependent of Both Parents

Sometimes, a qualifying child is legally the dependent of both of his or her parents following a divorce or separation. When this occurs, the IRS has provided information for how both taxpayers should proceed when the time comes to file their federal income taxes. 

In Revenue Procedure 2008-48, 2008-36 IRB, IRS has described the circumstances under which it will treat a child of parents who are divorced, separated, or living apart as the dependent of both parents for purposes of the:

  • Exclusion from gross income of certain employer-provided reimbursements of expenses incurred for the medical care of the employee's dependent child under Code Sec. 105(b);
  • Exclusion from gross income of employer contributions to an accident or health plan on behalf of the employee's children under Code Sec. 106(a) and Reg. §1.106-1;
  • Exclusion from gross income of fringe benefits qualifying as no-additional-cost services or qualified employee discounts under Code Sec. 132(a) that are treated as used by the employee due to use by an employee's child under Code Sec. 132(h)(2);
  • Deduction of medical expenses of the taxpayer's child under Code Sec. 213(a); and
  • Exclusions under Code Secs. 220(f)(1) and 223(f)(1) for distributions from Archer Medical Savings Accounts and Health Savings Accounts, respectively, if the distributions are used to pay qualified medical expenses of the account beneficiary's child.

IRS says that it will treat a child as the dependent of both parents for purposes of the above whether the custodial parent releases the claim to the dependency under Code Sec. 152(e)(2) if the taxpayers are:

  • Divorced, legally separated under a decree of divorce or separate maintenance, legally separated under a written separation agreement, or live apart at all times for the last 6 months of the calendar year; and, 
  • The parents of a child who: (1) receives over one-half of the child's support during the calendar year from the child's parents; (2) is in the custody of one or both parents for more than one-half of the calendar year; and (3) qualifies as a qualifying child or qualifying relative of one of the child's parents.
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