Who claims the kids?

The short answer

In Canada, the Canada Child Benefit follows where the children actually live: with 40% to 60% of the time each, both parents apply and each gets half, worked out on their own income. Only one parent can claim the eligible dependant credit for a child, and a parent who pays child support generally cannot. In the US, the parent with more nights is the custodial parent and can release the child tax credit to the other parent on Form 8332, but not head of household or the earned income credit.

The first tax season after a separation is when many parents find out that the rules about children and tax are stricter than they assumed. Both parents claim the same credit, both claims are reassessed, and an unexpected bill arrives. Or the benefit stops because no one told the tax authority anything had changed.

This guide is a focused companion to our broader guides on separation and tax in Canada and divorce and tax in the US. It covers who receives child benefits and who claims the children. It is general information, not tax or legal advice; confirm your own situation with the Canada Revenue Agency (CRA), the IRS or a tax professional.

Canada: tell CRA first

CRA asks you to update your marital status once you have been separated for more than 90 days because of a breakdown in the relationship, and to do it by the end of the month after your status changed. You can do this online in your CRA account, by phone at 1-800-959-8281, or on Form RC65. Benefits and credits are based on adjusted family net income, so CRA recalculates them starting the month after the change. If you were overpaid, CRA sends a notice. Reporting late is how many parents end up with a repayment.

LK Law also reminds parents that CCB depends on filing a return every year, even if you have no income.

The Canada Child Benefit: who gets it

CRA pays the CCB to the person primarily responsible for the child's care and upbringing, meaning the person who looks after daily supervision, medical needs and child care arrangements. When two parents live together, the female parent is presumed to be primarily responsible. That presumption does not decide things once you live apart; where the child lives does.

CRA uses three bands:

More than 60% of the time with you: full custody for CCB purposes. You apply.
About 40% to 60% (for example alternating weeks, or four days and three): shared custody. Both parents should apply.
Less than 40% with you: you are not eligible.

In shared custody, each parent receives half of the benefit they would get with full custody, calculated on that parent's own family income, as Canadian MoneySaver and LK Law explain. CRA also says you must notify it if your shared custody situation changes, and that someone who has a child temporarily, for example over the summer, can apply only for that period.

It follows what actually happens, not what the paper says

CRA and the Tax Court look at where the child actually lives. In Fortin v. The Queen (2015 TCC 209), described by LK Law, a parent with the children 43% of the time was found to share custody. In Zara v. The Queen (2017 TCC 45), the court counted overnights over a typical three-week cycle and accepted a 60:40 schedule that the parents followed in practice. Crowe Soberman notes that a court order assigning the benefit to one parent does not override the tax rules.

So keep a calendar of overnights, and make your agreement match how the children really live. See our 40 percent rule explainer.

Quebec

Quebec's Family Allowance from Retraite Québec uses similar bands: over 60%, 40% to 60% (shared), and under 40%. Retraite Québec asks parents to tell it when shared custody begins, says you do not need to wait for a mediation agreement or judgment to apply, and notes it can pay retroactively for up to 11 months. It also reminds you to contact CRA about the CCB.

Related benefits

Crowe Soberman explains that in shared custody each parent is also limited to 50% of the GST/HST credit for the child. Canadian MoneySaver notes that spousal support received is taxable income and can reduce the CCB and GST/HST credit; child support does not.

The eligible dependant credit (line 30400)

This credit is for a person without a spouse or partner who supports a dependant, such as a child, living with them. CRA's rules for separated parents are strict:

If you must pay child support for a child, you generally cannot claim the credit for that child. The parent who receives support can claim it, if otherwise eligible.
If both parents have a clear obligation to pay support for the child, normally neither can claim, unless the two of you agree which one will. If you cannot agree, neither can claim.
A formula is not enough. Calculating support using both incomes, for example under the Federal Child Support Guidelines in shared parenting, does not by itself mean both parents must pay. Unless the order or written agreement clearly says both must pay, only the parent who actually pays is treated as the payor.

CRA's example: two parents share custody 50/50 and one pays the other $250 a month based on both incomes. Only the paying parent is obligated, so that parent cannot claim for either child, and the recipient can.

Crowe Soberman notes that only one claim is allowed per dependant and one per household. Its drafting suggestions: with two children and support obligations on both sides, each parent can claim for one child; with one child, parents can alternate years. If both parents claim the same child, LK Law says CRA disallows both.

Write it down: "Parent A claims the eligible dependant amount for our child in even-numbered tax years and Parent B claims it in odd-numbered years. Each of us will confirm this to CRA if asked."

Leave it to "we'll sort it out at tax time".

US: who is the custodial parent

IRS Publication 504 defines the custodial parent as the parent the child lived with for the greater number of nights during the year. If nights are equal, the parent with the higher adjusted gross income is the custodial parent. Generally, the child is the qualifying child of the custodial parent.

Form 8332: releasing the claim

The custodial parent can let the other parent claim the child by signing Form 8332 or a similar statement. Publication 504 explains that the release lets the noncustodial parent claim the child tax credit, additional child tax credit and credit for other dependents. Rules to know:

The noncustodial parent must attach the form or statement to their return each year it applies.
For decrees or agreements that took effect after 2008, attaching pages of the decree is not a substitute; the custodial parent must sign Form 8332 or a similar statement.
The release must be unconditional. The IRS gives the example that it must not depend on support being paid.
The custodial parent can revoke a release using Part III, but must give written notice to the other parent in the previous year or earlier.

What Form 8332 does not transfer

Publication 504 is explicit: Form 8332 does not transfer the earned income credit, the child and dependent care credit, or head of household filing status. Those stay with the custodial parent if they qualify.

Head of household

A separated parent may file as head of household if they are unmarried or "considered unmarried" on the last day of the year. Publication 504 sets out the tests: you file a separate return, pay more than half the cost of keeping up your home, your spouse did not live in your home during the last six months of the year, and the home was your child's main home for more than half the year. A custodial parent who has released the dependency claim can still use the child as a qualifying person for head of household.

If both parents claim the same child

Publication 501 explains that only one person can claim a qualifying child for the child tax credit, head of household, the dependent care credit and exclusion, and the earned income credit, and these cannot be split between you for the same child. If both parents claim, the IRS treats the child as the qualifying child of the parent the child lived with longer; if time was equal, the parent with the higher AGI.

Put it in your agreement

Most disputes here come from silence. Your separation agreement or parenting plan should say:

Canada: who claims the eligible dependant credit for each child and in which years; that both parents will apply for the CCB if time is shared; and how the parenting schedule will be recorded.
US: which parent claims which child in which years; that the custodial parent will deliver a signed Form 8332 by a set date; and how any change in the schedule affects this. Because the form must be unconditional, ask your lawyer how to deal with unpaid support in the agreement itself.

The FairWell Parenting Plan records the schedule that drives all of this, and Separation Agreement Prep includes tax and benefit terms for a lawyer to review. The FairWell calculators show how shared time affects child support.

When to get professional help

If CRA or the IRS has reassessed or disallowed a claim.
If your schedule sits close to 40% or to equal nights, where small changes move benefits.
If you have children in different arrangements, a new partner, or one parent abroad.

An accountant or tax preparer can file correctly; a family lawyer can draft the clauses. The FairWell directory lists family lawyers and mediators by province and state.

This guide is general information, not tax or legal advice. Tax rules change each year; check the current CRA and IRS guidance before you file.

Sources

Common questions

We share custody 50/50 in Canada. Who gets the Canada Child Benefit?

Both of you. Where a child lives with each parent between about 40% and 60% of the time, CRA treats it as shared custody and both parents should apply. Each receives half of what they would get with full custody, based on their own family income.

Can both of us claim the eligible dependant credit?

Not for the same child. Only one claim is allowed per child, and a parent who pays child support generally cannot claim it. If both of you are clearly required to pay support, you must agree who claims; if you cannot agree, neither of you can. With two children, each parent can often claim one.

Does my agreement decide who gets the CCB?

No. CRA looks at where the children actually live. A court order or agreement does not override the tax rules, although it can be evidence of the arrangement. Keep a record of overnights.

In the US, can the parent who signs Form 8332 still file as head of household?

Yes, if they otherwise qualify. Form 8332 transfers the child tax credit, additional child tax credit and credit for other dependents to the noncustodial parent, but not head of household status, the earned income credit or the dependent care credit.

What happens if both parents claim the same child on their US returns?

The IRS applies tie-breaker rules. The child is treated as the qualifying child of the parent the child lived with longer during the year, or, if time was equal, the parent with the higher adjusted gross income. The other claim is disallowed.

Settle who claims the children before tax season

FairWell Separation Agreement Prep includes tax and benefit terms, such as who claims each child and when, in a document a lawyer in your province or state can review. Preparation for professional review, not a substitute for it.

Start your separation agreement

This guide is general information for parents, not medical, psychological or legal advice. It draws on published research and guidance from recognised health and family justice bodies, listed under Sources. Every child and family is different. If you are worried about your child or yourself, talk to your family doctor or a qualified professional. FairWell can help you find one through the professional directory. How we write and check our guides.