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The custodial parent is the parent with whom the child lived for the greater number of nights in 2013. 2013 had 365 nights. Unless you woke the child up halfway through a night to take him from one house to the other, then there IS a custodial parent for tax purposes based on number of nights who will claim the childcare expenses he or she paid (and can claim head of household). Higher AGI will not come into play in your example except in leap years. Don't forget Form 8332.

This helped answer some of my "procedural" questions on the ATX software --- From a comment on the ATX site made 11/17/14: The software will include the IRS instructions and forms, however there are several pieces of data that you must obtain from the client and enter manually. If the taxpayer had full coverage all year, then you will just need to check the box on line 61 of the 1040. If the taxpayer receives a 1095-A, you will need to complete Part II of the 8962. If there is a difference between the Premium Tax Credit calculated and the Advanced Premium Tax Credit received, it will flow to line 46 if the taxpayer received too much or line 69 if the taxpayer did not receive enough. If the taxpayer didn't have insurance or is claiming an exemption, you will need to fill out form 8965. If the taxpayer claimed an exemption through the marketplace, then the preparer will enter the Exemption number in Part I. (The taxpayer would provide that exemption ID number to you) If the taxpayer is claiming an exemption on the tax return, then you will select the exemption in Part III. If the taxpayer did not have insurance, then you will have to complete the Shared Responsibility Payment worksheet for each member of the household that didn't have insurance and the total amount will flow to line 61 of the 1040. Note: Part I, Part III and the Shared Responsibility Payment worksheet could be filled in the same return depending when the exemptions or lack of coverage apply. It is also possible that a 8962 and 8965 could be completed in the same return if the taxpayer had insurance for part of the year. Stephanie B Customer Care Director

I'm pinning this topic so that it will stay at the top of the post listing and be readily available without searching.

Thanks for spelling it out. I have printed your post for reference. I have attended two seminars on ACA and have received my AFSP certificate; but these instructions put it all in one nutshell.

Note that no 1310 is needed. That's only used when there is no court appointed administrator (and the personal rep agrees to pay out the refund according to state law--usually happens when the person dies intestate). See the form instructions.

And you are correct, the IRS will not question it as long as only one claims it. I had a couple to whom the credit was significant and they jointly agreed, after discussing it with me, to reduce the amount he paid in childcare by half of the credit amount. She got more credit then, by paying more, but they both felt they were reaching a fair division.

I believe that if you have a court-appointed administrator that the return needs to be paper filed.

I offered a refund this morning. The guy didn't get his refund from NJ yet. Not to go into the details (J-1 issue)....I told him I have a good reputation and I don't want to spoil it. Rather than him be mad at me (of course this is somehow my fault...lol)...I'd refund my fee. And, when he finally gets the NJ refund, he could repay me. He refused my refund...and apologized for taking his frustrations with the NJ tax dept out on me. Truly...the time I've spent on the phone with NJ since June...about 45 minutes to an hour a month. And it's just checking the status....all the paperwork is there....and sitting on a big pile of paper returns. Not worth it...if he comes back to me, I will tell him that the fee is for preparation only and one follow-up call in mid-July. My attorney is $500/hr. At those rates my client owes me a few thousand by now!

Yes, it can be a problem sometimes. Tax professionals seem to attract legal questions, estate planning questions, marriage counselling questions, and business development questions, in addition to tax questions. Heck, we get software questions too. Besides referring them to proper specialists, where appropriate, I always just hiked the fee and ranted to Don.

OK, maybe this time it will work. Tom Hollister (Soon to be Newark), CA