Understanding the Dependent Tax Deduction Rules for Divorced Parents

By Tracy Achen | Updated July 16, 2025

The rules for the Dependent Tax Deduction were changed when The Tax Cuts and Jobs Act was signed into law, reducing the deduction for dependents to zero for tax years 2018 through 2025. The One Big Beautiful Bill of 2025 permanently eliminated the tax exemption for dependents.

Even though you’ll no longer receive an exemption per dependent child on your taxes, claiming dependents still matters because it affects other tax benefits. Being able to claim a dependent child means you’ll be eligible (under certain situations) to:

  • claim the Child Tax Credit, 
  • claim the Child and Dependent Care Credit, 
  • qualify for a higher Earned Income Credit (if you’re the custodial parent), 
  • and file as Head of Household.

Which Parent Can Claim a Child as a Dependent? 

dependent tax information page

Only one parent can claim the child as a dependent on their taxes after a divorce or legal separation. It’s common for the custodial parent – the one the child spends more than half the year with – to claim the dependent.

The IRS has stipulated conditions for claiming dependents after divorce. For example, the custodial parent is the one with whom the child resides the greater number of nights during the year, regardless of the terms of the divorce decree. But this can get complicated with parents share 50/50 custody. When the number of nights spent with each parent is equal, the parent with the higher adjusted gross income is considered to be the residential or custodial parent. 

In certain situations, the non-custodial parent can claim the child as a dependent if the custodial parent releases the dependency exemption by signing Form 8332 (discussed below). This is often spelled out in the divorce decree, stating that the parents will take the dependency claim in alternating years. The dependency release only impacts certain child-related tax benefits, such as the Child Tax Credit.

Tax Benefits of Claiming a Child as a Dependent

Claiming your child as a dependent can lower your tax bill. Generally, only one parent can claim the child-related tax benefits for a child, but it depends on the various tax rules. Below is a general overview of the tax credits and who gets to claim them. You can also see Publication 504, Divorced or Separated Individuals for more information. 

Child Tax Credit

The child tax credit provides up to $2200 in credit per each qualifying child under the age of 17 (there are income restrictions so talk with your tax advisor).  This credit can reduce your taxes by up to $2200 per child if you owe taxes, or up to $1700 per child that is refundable if you don’t owe taxes.

The Child Tax Credit income limit has been increased to $200,000. This means you will qualify for the credit if you earn less than $200,000, are filing separately, and can provide a valid social security number for your dependent child.

Only one parent is eligible to claim the child tax credit. For a non-custodial parent to receive the child tax credit, the custodial parent must release the dependency exemption by signing Tax Form 8332, which is discussed below.

Earned Income Tax Credit

This tax credit is refundable, meaning you could receive money back after the credit is deducted from the amount of taxes you owe. The earned income credit is a tax break for low income workers, and the credit it directly tied to the number of dependent children and the taxpayer’s income. This credit is available to custodial parents whose children who reside with them for more than half the year. And the non-custodial parent may qualify for a smaller credit as well.  

Dependent Care Credit

This credit helps cover the cost of child care so parents are able to work. To apply for this credit, the qualifying child must be younger than 13 years old or disabled and have lived with you for more than half the tax year. This credit is based on the custodial parent’s income and is not available to a non-custodial parent. This credit is not refundable, which means it can reduce how much you owe in taxes, but won’t refund what is left over. 

Head of Household

This filing status is only available to the custodial parent. To qualify, your child must be younger than 19 (or 24 if a full-time college student) and have lived with you for more than half of the tax year. You must also provide more than half of the household expenses. If you qualify, filing as head of household allows you to claim a larger standard deduction and pay a lower tax rate than the single tax filing status.

Releasing the Dependency Claim

For a non-custodial parent to claim a child as a dependent, they must attach a signed Form 8332 to their taxes. Signing a Form 8332 allowing your ex to claim the dependency exemption would mean your ex would be able to claim the child tax credit. It’s important to note that the non-custodial parent cannot claim the Earned Income Credit for a child, even with a signed Form 8332. 

If you decide to revoke your release of claim to the exemption, you will need to complete section 3 of Form 8332. It's important to note that it will not be effective until the tax year after you've provided the non-custodial parent with a copy of the revocation. For example, if you revoked the claim to exemption in 2024, the earliest tax year it will be effective is 2025.

You'll need to attach a copy of your revocation to your tax returns for every year the exemption will be claimed as a result of the revocation. It's also a good idea to keep a copy of the revocation for evidence if any disputes arise.

Be Aware that Tax Laws Change

Over time, some tax credits increase or revert to previous levels and it's hard to keep up with all the changes. That's why it's important to consult with a tax advisor when claiming children on taxes to make sure you're in compliance with the latest tax laws.

Along with who will claim the dependent tax deduction, another thing to consider is which parent will get to claim head of household for tax purposes. Find out what your options are in the related tax articles below: