In general, the custodial parent claims the children of divorced, separated or never married parents as a dependent on his or her tax return. For tax return purposes, the custodial parent is defined by the IRS as the parent or guardian “with whom the child lived the greater number of nights during the year.” If both parents have the child or children an equal amount of nights, the parent with the higher adjusted gross income is considered the custodial parent.
Most divorced, separated or never married parents consider the issue of which parent claims the child or children for tax purposes in their final settlement or final resolution of the divorce or paternity. Parents can agree or be ordered by the court as to claiming of dependent tax exemptions. In many cases, the parents will alternate dependent exemptions or divide the dependent exemptions for each tax year with one parent using the dependent exemption in one year or both parents using dependent exemptions for separate children for the tax year. Only one parent may claim a child for dependency exemption purposes per tax year.
There has been a recent change in the Internal Revenue Code concerning the necessary documentation parents must use to claim dependency exemption purposes. If the divorce decree, separation agreement or other court order was issued after 1984 but prior to 2009, the noncustodial parent who has been ordered to claim the dependent child for tax purposes may continue to attach to his or her tax return a copy of the court order allowing the release of the exemption to the noncustodial parent. If the court order was issued after 2009, the noncustodial parent must attach the new Form 8332 to his or her tax return in order to claim the dependency exemption. The new Form 8332 must be signed by the custodial parent releasing the exemption. The new Form 8332 allows a custodian or custodial parent to release the dependency exemption for the current year, multiple future years or to revoke the release of the dependency exemption all together. A revocation will not be effective until the tax year following the revocation. The custodian parent must make all reasonable efforts to notify the noncustodial parent of the revocation. After revocation, an executed copy of the new Form 8332 must be attached to the custodial parent’s tax return each year.
For example, Susan’s and John’s divorce was final in May 2008, and the final decree provided that Susan would be custodial parent of their child Sally. The order allowed John to claim their child Sally as a dependent on his tax return every year thereafter. John does not need Susan to sign the new Form 8332 in order for him to claim Sally as his dependent for the subsequent tax years. If the court order required John to be current in child support for Sally in order to claim Sally as a dependent every year and John fails to pay child support, Susan could revoke her release of the claim of the dependency exemption by completing and mailing to John the new Form 8332. If Susan’s and John’s divorce is final after 2009, Susan needs to sign the new Form 8332 for John to attach to his tax return in order to claim Sally for dependency purposes.
Claim to an exemption does not affect a parent’s filing status as head of household nor does it affect a parent’s right or ability to claim the earned income credit.
Tags: child custody, IRS, tax returns