Divorced?
Know the Rules
Before Claiming a Dependent
If you are a divorced or separated parent, the rules
for determining which parent can claim the children as dependents is
confusing at best.
When parents divorce, the determination of which will
claim the children is generally made in the terms of the divorce decree.
The judge often awards the dependency exemption to the noncustodial parent
because that parent frequently is paying child support while the children
reside with the custodial parent. This arrangement tends to even out
the tax burden somewhat by allowing the noncustodial parent a deduction
for personal exemptions of the children, while there is not deduction for
the child support payments.
The above arrangement works well if both parents
follow the judge's ruling. If one or both do not, the trouble
starts.
Under tax regulations, the IRS is not bound by the
ruling of a state judge in the divorce decree. The IRS will assume
that the custodial parent is entitled to the dependency exemption --
period. The only exception to this assumption occurs when the
custodial parent signs Form 8332, Release of Claim to Exemption for Child
of Divorced or Separated Parents, or a document containing the exact same
information as the form. The noncustodial parent must attach the
Form 8332 or similar statement to his or her tax return to claim the
dependency exemptions for the children.
If the custodial parent refuses to sign the waiver
and claims the children, the noncustodial parent cannot claim the same
children. If both do, the IRS will send a notice to both parents,
remove the dependent children from both tax returns and adjust the tax or
refund of each parent until the dispute is resolved. Once the
custodial parent proves to the IRS that the children lived in her or his
home more than half the year, the IRS will allow the dependency exemption
on that parent's return.
The only way the noncustodial parent can recover the
dependency exemption granted under the divorce decree is to go back to the
judge who issued the decree and request a court order forcing the
custodial parent to sign the Form 8332.
