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Who gets to claim the child tax exemption? March 10, 2008

Posted by margolinlegal in Child Custody, Child Support, Dissolution, Myths, settlement.
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istock_000004891591xsmall.jpg Clients often come to me asking whether they or their ex-spouse/unmarried parent of their child can claim their joint child as a dependents for tax purposes and receive the dependent tax exemption. They often think that this is a decision that is up to them and attorneys often use it as a bargaining chip.

In a divorce or custody case I am representing clients in state court. The United States Congress, through the tax code, has determined how the child/dependent tax exemption should be awarded. The supremacy clause of the United States Constitution prevents state courts from deciding issues of federal law. This means that a state court cannot properly award the exemption to a parent who otherwise would not qualify for the exemption under federal law.

The qualifying parent under IRS rules is the “custodial parent,” which is defined as “the parent having custody for the greater portion of the calendar year.” The award of “legal custody” has no effect on this definition, rather the custodial parent is “the parent with whom the child resides for a greater number of nights during the calendar year.” In cases where the child resides an equal number of overnights with each parent, the parent with the higher adjusted gross income for the calendar year is awarded the exemption.

Parties can agree to share the exemption or to have the parent that does not qualify receive the exemption. This is usually accomplished by a provision in the parties’ judgment. In order to provide the non-qualifying parent with the exemption, the qualifying parent must sign a written declaration and the declaration must be attached to the non-custodial/non-qualifying parent’s income tax return. This can be completed using IRS tax form 8332, which can be found here http://www.irs.gov/pub/irs-pdf/f8332.pdf.

A decision to allocate the dependent exemption to the non-qualifying parent should not be taken lightly. In addition to the exemption, the non-qualifying parent will also receive the child tax credit. Therefore, an agreement to deviate from IRS rules can have significant tax impacts for the qualifying parent and creat a tax windfall for the non-qualifying parent. If the agreement will be included as a provision in a judgment, the decision to do so should be carefully discussed with your attorney.

The IRS faq located at http://www.irs.gov/faqs/faq-kw46.html provides detailed information on this question.

Comments»

1. Lisa - May 6, 2008

My NJ attorney says that my superior court judge has the right to decide that my ex gets to claim 2 children as exemptions despite the fact that they do not live with him, I have sole legal custody and he does not pay up on his child support. Maybe NJ is different from Oregon as far as this issue goes….Also, IRS says I have to go by the judge’s order no matter where my kids live. I called them.

2. Cynthia Crowley - September 24, 2008

In 2006 my husband was award custody of his two children.The judge in Dixie county Florida.Ruled that the noncustudial parent be alowed to claim the Younger of the two every year intill the oldest turns 18 then they would alternate everyother year till the youngest is 18.From what I have read this is not proper.How do we fix it.

3. Lori Leverton - November 5, 2008

How much income does it take to qualify for a tax exemption for the child? I have been divorced since 1998…(3 children)..I only asked for 1 for a tax exemption…I did not get any….now I only have 1 living with me….I want to know what qualifies me to claim my child as an exemption. Do they take the joint income (my spouse and I) or just my income? My child lives with me full time. Thanks Lori

4. Teresa - February 7, 2011

If my ex is allowed to claim our daughter till she turns 18, can I claim her when she is 18?


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