both claimed kids

My divorce decree states that, for tax purposes, I am required to claim all of my dependants on W-4s. At the time, I interpreted this to mean that I could claim both of my children on federal income taxes. My ex-wife tells me that since she is the custodial parent she has the right to claim the children and fully intends to do so. I don't know if she has filed her taxes yet, but I now live in fear of an audit with a penalty! What can I do? (I live in Texas.)

I was in the same situation when my husband and I split up. We both claimed the kids on federal returns. After an investigation from the IRS as to why both parents claimed the kids, it ended up that I was able to claim them because they were in my custody for the whole 12 months of the year and there were no papers saying that he had the right to claim them for certain years. I don't think they will audit you but they may take away the deduction if there are no papers saying you have the right to claim them on your federal return. You may want to have your papers modified to say that you get to take the deduction every other year or something so that this doesn't happen again! Good Luck!

If your decree says u get to use the kids as dependents and your child support is up to date than ure x is wrong. Don't worry about an audit. Go ahead and file ure taxes (but more than likely u will have to file a paper return-no efile). My husband has gone thru the same thing and about 6mos from now the IRS will catch where ure dependents were claimed on 2 or more taxpayers return and will send both of u a letter stating that. If neither of u send an amended return the next step will be another letter from the IRS asking for proof of dependency status. U then send them the front page of ure divorce decree and the page that says u have the right to use the kids as dependents (u might be wise to go to the court and get a certified copy of this decree) and once the IRS receives this they will then amend your xs tax return and if she received a refund from claiming the kids they will tell she owes them money back and they will add penalties and interest to this amount. If u don't trust my judgement here merely call 1-800-447-1040 this is the number to IRS help line and they will basically give u the same answer(they did me) Good Luck!