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It’s tax time. Grab your W2’s, your 1099’s, your child support orders and your divorce decrees and get that thing done. Who gets to claim the children on their taxes is a hot and many times a contested topic at this time of year. Parents who are not entitled to claim their children as deductions do it nevertheless, parents who are entitled to claim their children many times are not sure that they are and others are getting bullied into allowing the other parent to take the deductions when they are not entitled to. There is much fighting going on, and the bottom line is that it doesn’t matter what anyone wants or asks. To some degree, it doesn’t matter what the divorce decree or child support order says because the IRS makes their own rules and when it comes to your tax return those are the only rules that matter. The IRS doesn’t’ care about your court order. They don’t care what the judge entered into the decree. They will award dependency to the parent that they think should receive it. The IRS and only the IRS determines who is eligible to claim their children as a deduction.
The parent whom the child lives with for the greater part of the year – greater being any amount more than 50%, is the parent who is allowed to take the deduction. That parent is determined by the IRS to be the custodial parent.
The parent who has the child for less than 50% of the year is only allowed to take the deduction if the custodial parent signs a release of their claim to the exemption. The IRS has a form for that. It’s called FORM 8332, and the non-custodial parent must attach a copy of the release to their return to claim their child as a dependent.
In cases where two parents share physical custody, but the child clearly resides with one parent for more than 50% of the time, then the parent with the greater percentage of parenting time is eligible to claim the child as a dependent for tax purposes. If you have not yet read my blog – Joint Custody – the child support avoidance Trojan horse, now might be an excellent time to do that.
In cases such as with joint custody where both parents are IRS eligible to claim the child as a qualifying dependent, and the child lived with each parent equally (50/50) then the IRS uses their “tiebreaker” rule which is that the parent with the greater adjusted gross income (AGI) shall claim the child as a dependent for tax purposes. Again, Joint Custody – the child support avoidance Trojan horse blog is a good one to read at about now.
Many custodial parents report that they have been bullied in the courtroom, in their lawyer’s office, and during meditation into releasing their rights to the deduction. Sometimes custodial parents aren’t even consulted about releasing their rights and it’s written into the decree or order as if it’s a matter of course. It isn’t. If you are the custodial parent and you negotiating your child support award and agreements, remember that unless you agree to release your deduction and sign and provide an IRS FORM 8332 to the other parent every tax season the other parent cannot take it.
So, what do you do if you are the custodial parent and someone else claimed your child inappropriately? If they jumped out ahead of you in line and filed their return first, sadly, your return will be rejected if you filed electronically. You would then need to file a paper return, claiming the child as appropriate and provide your proofs. The IRS will process your return in the normal time and send you your refund. At some point, you will receive a follow-up from the IRS informing you that your child was claimed on someone else’s return and request that if you made an error that you file an amended return unclaiming the child. Likewise, the other person who claimed the child will also receive a letter and will need to respond. If you are the custodial parent on record and you did not sign the FORM 8332 releasing your claim on the exemption, you should get the tax benefits. The non-custodial parent can only claim the child as a dependent if the custodial parent gives permission. Winner gets the tax benefits. Loser gets to pay the IRS back with penalties.
Simone Spence is not a lawyer and she does not provide legal or tax advice. She was a child support collections consultant for over 20 years and has written three highly regarded child support collection books. She developed the collections platform “Athena.”
In general, only a licensed attorney can give legal advice, but there is a distinction between “legal advice” and “legal information.” Any non-lawyer can simply recite laws, but it is illegal for a non-lawyer or unlicensed attorney to offer legal advice.
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