The question often arises after a divorce in Texas — which parent gets to claim the child as a dependent for tax purposes? Often this issue is settled by the obvious split of parenting time greatly in favor of one parent, but as we have seen a rise in equal time splits for parents and children we have also seen a rise in arguments over who should be entitled to the dependence exemption.
The IRS provides a special rule for children of divorced or separated parents in IRC 152(e). The custodial parent will have the right to claim the exemption provided that the parents lived apart for at least six months out of the year, the parents together provided for more than half the child’s support, and the child lived with one or both parents for more than half the year. The custodial parent is determined either by the face of the court documents or by physical custody. Physical custody is which parent has the child for the greater number of nights per year. If there is a literal tie, the winner is the parent with the higher adjusted gross income. The custodial parent may release the right to claim the dependency exemption to the noncustodial parent by completing Form 8332 “Release Revocation of Release of Claim to Exemption of Child by Custodial Parent”. This form must be attached to the noncustodial parent’s tax return to claim the dependency exemption.
It is not enough to have the assignment of the dependency exemption contained in the divorce decree. Likewise, the IRS will not accept a dependency release form if the court documents condition the exchange of the dependency exemption upon current payment of child support.
The general requirements for claiming a dependency exemption include
- The taxpayer cannot be the dependent of another.
- The dependent must be a US citizen or resident alien or resident of Canada or Mexico for some part of the year.
- The dependent cannot claim himself or herself on his or her own return.
- The dependent must be a qualifying child or qualifying relative.
A qualifying child is one who:
- is the taxpayer’s child, stepchild, foster child, sibling, or step sibling.
- either under the age of 19 and younger than the taxpayer and spouse, or under age 24, a full-time student, and younger than the taxpayer and spouse.
- must have lived with the taxpayer for more than half of the year.
- must not have provided not more than half of his own support.
- No joint return is being file during the year.
- Only one person can claim the dependency exemption for the child.
For 2014, the dependency exemption is $3,950.
A child who is over the age of 18 (and not a full-time student) or has been emancipated cannot be claimed as a dependent.
Hat tip to the ABA Section of Family Law’s Fall 2014 edition of Family Advocate and the article “The Dependency Exemption” for the inspiration for this article.