When it’s time to do your taxes, only one parent will be allowed to claim your child as a dependent in order to get the exemption on State and Federal taxes.
Normally, it’s the parent who is the residential custodian for mailing and educational purposes would be entitled to claim the child as a dependent, unless the parties or the court determine otherwise.
Care should be given to deciding who can claim the dependency exemption, as its impact can vary with the level of income. A parent with minimal income probably would pay little if any federal or state income tax, for example, so the dependent exemption would not yield any additional benefit. By contrast, a parent with more substantial income will definitely benefit from having the added dependent exemption.
Courts can award one parent the dependency exemption exclusively, or alternate the exemption so that each parent has the exemption every other year.