Does claiming child as dependent affect my self-employment tax burden when letting ex claim child instead?

So, I'm stuck in this frustrating tax situation. I'm using TaxAct this year and want to let my child's mother claim our son as a dependent even though we have 50/50 custody and both support him equally. I've been running some numbers and when I don't claim him as my dependent, it looks like I owe around $2,500 in federal taxes from my self-employment income. I'm trying to figure out how much difference it would make if I did claim him versus letting his mom do it. We're trying to be fair about this whole co-parenting thing, but I also don't want to get financially wrecked in the process. Does anyone know how much of an impact letting her claim him will have on my overall tax situation? Is there a way to calculate the difference before I make a final decision? I'm wondering if there are specific credits I'd be missing out on that would make a big difference for my self-employment taxes.

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18 comments

Destiny Bryant

•8M

The decision to let your child's mother claim your child as a dependent will definitely impact your tax situation, but it depends on several factors. When you don't claim your child, you're potentially giving up the Child Tax Credit (worth up to $2,000 per qualifying child), the Earned Income Credit (if your income qualifies), and possibly the Head of Household filing status (which gives better tax rates and a higher standard deduction than filing Single). In TaxAct, you can actually run this comparison yourself. Complete your return twice - once with claiming your child and once without. Just save two separate files. This will show you the exact dollar difference for your specific situation. Since you're self-employed, remember that claiming or not claiming a dependent doesn't affect your self-employment tax (the 15.3% that covers Social Security and Medicare). That's calculated on your business profit regardless of dependents. But it could significantly impact your income tax, which is separate.

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Destiny Bryant

•8M

Yes, your self-employment tax will remain exactly the same regardless of whether you claim your child or not - it's always 15.3% of your net self-employment income (though you do get to deduct half of it on your return). The Child and Dependent Care Credit is available to the parent who claims the child as a dependent. So if mom claims the child, only she can claim this credit for any qualifying childcare expenses she paid. That's one more thing to consider in your calculation of who should claim the child. If either of you paid for daycare, after-school programs, or other qualifying childcare expenses, that person might benefit more from claiming the child.

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TillyCombatwarrior

•8M

After struggling with a similar situation last year (co-parenting, self-employed, trying to figure out who should claim our daughter), I eventually found this amazing tool at https://taxr.ai that saved me so much frustration. It analyzed both my tax situation and my ex's, then showed us exactly who would benefit more from claiming our daughter. The tool lets you upload documents or just enter your info, and it breaks down all the credits and deductions each parent would get. In my case, it turned out my ex would save $3,200 by claiming our daughter while I'd only save $1,800, so we made the financially smart choice even though I initially thought I should claim her.

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TillyCombatwarrior

•8M

It does analyze state tax implications as well, which was crucial for me since my state has additional child tax benefits that aren't the same as federal ones. The tool showed us the complete picture for both federal and state taxes. As for safety, I was initially concerned too, but they use bank-level encryption and don't store your documents after analysis. You can even use it without uploading actual documents - just enter the information manually. I didn't need to create a full account with personal details, just an email to receive the analysis report.

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Jungleboo Soletrain

•8M

I wanted to follow up about that taxr.ai site I was skeptical about before. I ended up trying it with my ex last weekend and wow - it actually showed us that we'd save over $2,100 if I claimed our son instead of him, which was the opposite of what we'd been doing for years! The breakdown was super clear about exactly which credits each of us would get. Since I have lower income but still work full-time, the earned income credit made a huge difference for me. My ex actually gets phased out of some benefits due to his income level. We're adjusting our agreement now based on actual numbers instead of just guessing. Should have done this years ago instead of just alternating years without knowing the real impact.

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Rajan Walker

•8M

If you're trying to reach the IRS to confirm dependent claiming rules (which can get complicated with 50/50 custody), good luck getting through! I spent 3 DAYS trying to get someone on the phone last month. Then I found https://claimyr.com and used their service - watched their demo at https://youtu.be/_kiP6q8DX5c and was skeptical but desperate. They actually had an IRS agent call ME within 2 hours! The agent confirmed that with 50/50 custody, you can decide between parents who claims the child each year, and this can be different year to year. There's no automatic "mom gets to claim" rule when custody is truly equal. The agent also explained that whoever claims the child gets all associated credits (Child Tax Credit, EIC if eligible, etc).

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Rajan Walker

•8M

It's not magic - they basically wait on hold with the IRS for you. They have systems that dial and wait in the queue, then when they finally get through to a real person, they connect that call to your phone. So you're still talking directly to an actual IRS agent, but you didn't have to waste hours listening to hold music. The reason it works is they're essentially doing the waiting for lots of people simultaneously with their system. When I used it, I got a text when they were close to reaching an agent, and then my phone rang with the IRS on the line. The agent had no idea I'd used a service - from their perspective, I had just called in normally.

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Nadia Zaldivar

•8M

I need to publicly admit I was completely wrong about Claimyr. After calling it a scam, I was still desperate enough to try it because I needed to talk to the IRS about my dependent situation too. I got a call from an actual IRS agent within about 90 minutes. The agent walked me through the tie-breaker rules for my 50/50 custody situation and confirmed that my ex and I could decide between ourselves who claims our daughter each year as long as we don't both try to claim her. The agent also explained that the parent who claims the child gets ALL the child-related benefits - you can't split them up with one parent taking certain credits and the other taking different ones. That information alone saved me from making a costly mistake on my return.

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Lukas Fitzgerald

•8M

You absolutely can include tax arrangements in your custody agreement, and the court can enforce it. Many parenting plans specifically address who claims the child in which years (alternating, always one parent, etc). If it's not in your custody order yet, you can still create a separate written agreement. While not as strong as a court order, it's still evidence of your agreement if there's a dispute later. Some parents even use a service like Our Family Wizard to document these agreements, which gives them more weight since the communication is timestamped and can't be altered later.

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