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Deductions, credits, and gains
Your ex claims the child. You can still claim the earned income credit.
The parent the child lives with keeps the earned income credit and head of household, even when the other parent takes the child tax credit. One of the most common and most expensive mistakes we see on returns for divorced and separated parents, and how it goes on the return.
Here is a return that walks in every season. A divorced parent, a child who lives with her most of the year, and a decree that says the other parent claims the child. So she files single, with no child on the return at all. That return is wrong, and it usually costs her several thousand dollars. The child tax credit can be handed to the other parent. The earned income credit and head of household cannot. They follow the child’s home, and no decree or signed form moves them.
Why the benefits split
“Claiming a child” is not one thing. It is five separate tax benefits, and they follow two different rules.
Two of them can be released to the other parent. When the custodial parent signs Form 8332, or a pre-2009 decree spells it out, the noncustodial parent takes the dependent and the child tax credit.
Three of them cannot be released. They stay with the parent the child lived with for more than half the year, whatever the decree says and whoever claims the dependent: the earned income credit, head of household filing status, and the child and dependent care credit. The IRS calls this the rule for children of divorced or separated parents, and it is written into the instructions for Form 1040 and Schedule EIC.
| Tax benefit | Parent the child lives with | Parent who claims the dependent |
|---|---|---|
| Dependent exemption | No | Yes |
| Child tax credit ($2,200 for 2026) | No | Yes |
| Earned income credit | Yes | No |
| Head of household filing status | Yes | No |
| Child and dependent care credit | Yes | No |
What the custodial parent has to show
Three tests, and all three must hold.
The child lived with you more than half the year. Seven months is enough. Keep school records, medical records, or a lease that shows the child’s address, because that is what the IRS asks for if it asks.
You were unmarried on December 31. Divorced counts. Legally separated under a court decree counts. Separated but still married is a different set of rules (the considered-unmarried test), so ask.
You paid more than half the cost of keeping up your home. Rent or mortgage, utilities, groceries, repairs. This is the test for head of household only; the earned income credit does not require it. A parent living with a partner or a relative who covers most of the household may still have the EITC and not head of household.
Worked example: one child, $25,000 of wages, tax year 2025
A divorced mother earns $25,000. Her 11-year-old lives with her seven months of the year. Her ex claims the child under their decree and takes the child tax credit.
| Line | Filed single, no child | Filed correctly |
|---|---|---|
| Filing status | Single | Head of household |
| Standard deduction (2025) | $15,750 | $23,625 |
| Federal earned income credit | $0 | about $3,900 |
| Colorado EITC and child tax credit | $0 | about $2,500 |
| Child tax credit | $0 (ex claims it) | $0 (ex still claims it) |
| Difference, federal and Colorado together | about $7,000 |
Figures rounded. Colorado’s credits ride on the federal qualifying child, so they came along once the federal side was right. Nothing was taken from the other parent.
Already filed as single? Amend it.
The fix is Form 1040-X and an amended Colorado return. You generally have three years from the original due date to amend and collect the refund; for a 2025 return, that is April 2029. If a preparer filed it that way, bring us the return. This amendment is routine.
For preparers: how it goes on the return
This is where most of the mistakes happen. The child has to be on the return in a way that gives the custodial parent the EITC and head of household without giving her the child tax credit. The sequence that works, in ATX and in most other software:
1. Enter the child in the Dependents section. Name, SSN, relationship, date of birth, and the actual months the child lived in the taxpayer’s home. Then mark the child as not claimed as a dependent this year. In ATX that is the “Check to not claim dependent this year” column on the Dependents tab; other software uses a dependent code. Do not check the box for a child who did not live with the taxpayer due to divorce or separation; that box belongs on the noncustodial parent’s return. Once marked, the software drops the child tax credit for that child and keeps the child flagged for EITC. Page 1 of the 1040 should show zero dependents and line 19 should be zero.
2. Set filing status to head of household. On the filing status line, check head of household and enter the child’s name and SSN in the space for a qualifying person who is a child but not your dependent. Most software fills this from the Dependents entry.
3. Check Schedule EIC. The child should appear with the SSN in the SSN column, not the ITIN column, and the months carried over. A child with an ITIN does not qualify, so a number in the wrong column calculates the credit at zero.
4. Answer the eligibility questions. The worksheet will ask whether the child could be the qualifying child of another person. The answer is yes, because the child is also the ex’s qualifying child, and that is fine; the divorced-parents rule resolves it. If the worksheet stops with “cannot take the credit,” the usual cause is that the software does not see a child with a valid SSN, which goes back to step 1. Fix the entry rather than overriding the calculated answer. Overrides on calculated fields cause e-file rejects.
5. Explanation on the 1040-X, Part II. Something like: “Taxpayer is the custodial parent. Child resided with taxpayer more than half of 2025. Filing status corrected to head of household; child claimed for earned income credit and head of household only. Noncustodial parent claims the dependency exemption and child tax credit under the rules for children of divorced or separated parents.” That paragraph usually keeps the duplicate-claim notice from going out.
6. Tiebreaker. If both parents claim the EITC or head of household on the same child, the IRS awards it to the parent the child lived with longer. The custodial parent wins that outright; it is the other return that gets corrected.
7. Form 8867. The due-diligence checklist still applies, and the residency answer is the one to document.
The checklist question
For any unmarried client with a child in the household, ask one question before anything else: who did the child live with most of the year? Not who claims the child. Who the child lived with. If the answer is “me” and the return is single with no child on it, stop and look again.
What to bring your preparer
- The return that was filed, if you are amending
- The divorce decree or separation agreement, and any Form 8332 you signed
- The child’s Social Security card and date of birth
- Something showing the child’s address during the year: school records, medical records, a lease
- Rent or mortgage, utility and grocery records if there is any question about who paid for the household
Questions people ask
My decree says my ex claims the child in odd years. Does that take away my earned income credit in those years?
No. The decree can move the dependent and the child tax credit. It cannot move the earned income credit, head of household, or the dependent care credit. Those stay with the parent the child lives with every year.
My ex already filed and claimed the child. Will my amended return be rejected?
A 1040-X is not rejected for a duplicate SSN the way an original e-file is. If your ex also claimed the EITC or head of household on the same child, the IRS writes to both of you and applies the tiebreaker. Your residency records settle it.
We split time exactly 50/50. Who gets it?
Count nights. If it is truly equal, the parent with the higher adjusted gross income gets the child for all five benefits. There is no releasing the EITC by agreement.
Do I have to tell my ex?
No. Nothing on his return changes. He keeps the child tax credit he claimed.