How do you determine who receives the dependency exemption for the children?
To claim the dependency exemption the parents must be divorced or separated, have a separation agreement or have lived apart during the last six months of the year. Generally only the custodial parent may claim the dependency exemption. Custody is determined by the number of overnights slept in the home of a parent. The parent having custody for a greater portion of the year is considered the custodial parent.
There is, however, an exception to the custodial parent rule if both parents agree to the contrary. A non-custodial parent may claim the dependency exemption for a child provided the custodial parent signs a release of the exemption for that tax year. The release is an IRS form that must be signed by the custodial parent and included with the non-custodial parents tax return.
Check with your tax advisor about the effect signing a release may have on other deductions.
Additional questions? Refer to the following link for more information https://www.irs.gov/publications/p17/ch03.html#en_US_2015_publink1000204295