FORM 2441 - divorced parents

[BuchTaxes]

My clients return was rejected because a dependents SSN was used on a previous filed return (mother of child) for the daycare credit Form 2441.  Both the mother and father each pay half of the daycare expenses ($2,100 each).  Per their child custody agreement, for 2023, the father gets to file as HOH (child living with him for over 6 months) while the mother gets the dependency credit.  Does my client need to paper file to receive the Child Care Credit?  If he paper files, would the IRS give him the $1500 ($300 credit) and recoup from the mother the difference?  Or can he claim the difference from what the mother reported when e-filing or will this also reject because of the use of SSN?  

[TaxGuyBill]

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@BuchTaxes wrote:

Per their child custody agreement, for 2023, the father gets to file as HOH (child living with him for over 6 months) while the mother gets the dependency credit. 

Does my client need to paper file to receive the Child Care Credit?  If he paper files, would the IRS give him the $1500 ($300 credit) and recoup from the mother the difference?

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Did the child actually live with him for over half of the year (and more nights than the child spent with the mother)?  Did he give the mother a Form 8332?

Yes, he will need to file on paper and the IRS should give him the 'full' credits.  After some time, the IRS will send a notice to both your client and the mother asking them to 'prove' their claim on the child.  The 'loser' pays back the credit they received, plus interest.

[BobKamman]

I'm glad I don't have any 2441 clients.  Well, OK, there's one who hired a nanny and doesn't understand Schedule H no matter how hard I try to explain.  But I think what the rule is, the noncustodial mother can't claim the credit.  She could always file an amended return.  But shouldn't the custodial father be allowed to claim the full $2,100 he paid?  Where are you getting the $1,500?  Did they think they had to split the $3,000 limit?

[BuchTaxes]

I thought maybe they could split it for a total of $3000 but that must not be the case. Thanks for the answer.

[Bsch4477]

The IRS doesn’t pay any attention to custody agreements. The couple can’t just alternate HOH irrespective of who is actually the custodial parent. Is this what is happening?

[BobKamman]

There is no indication that is happening. We are told that the custody agreement places the child with the father more than half the time, so the tax return filing status follows the custody agreement.  Let's not make false assumptions and then jump on someone for apparently doing the right thing.