A standard provision in Marital Settlement Agreements between divorcing spouses with children who plan to share physical custody for an equal amount of time is language allowing one parent to claim the child for tax exemptions and credits during even numbered tax years, and the other parent for all odd numbered tax years. Sometimes spouses have an even number of children, and they can agree each parent will claim one-half of the kids every year.
But what happens when spouses cannot agree on who gets to claim a child? Fortunately, the Internal Revenue Service (IRS) provides ground rules as explained in IRS Publications 501 and 504:
A parent cannot claim a person as a dependent unless the person is that parent’s “qualifying child.” To be a qualifying child, the person:
- Must be your child;
- Can be any age if permanently disabled;
- Must have lived with you for more than half the year;
- Must not have provided more than half of his own support for the year;
- Must not be filing a joint return for the year.
Typically, the important factor in deciding who is allowed to claim the child is the amount of time the child lives with one parent versus the other. When the child lives 50.1% of the time with Spouse No. 1, then Spouse No.1, also known as the “custodial parent,” has the right over Spouse No. 2, the “non-custodial parent,” to claim the child.
As stated above, these ground rules seem fairly simple on their face. Settlement negotiations are never so simple, however. Sometimes a custodial parent may trade claiming a child to gain something else during settlement, or the non-custodial parent refuses to provide something unless allowed to claim the child. The IRS places the power in the custodial parent’s hands. The non-custodial parent can claim the child if the custodial parent executes IRS Form 8332 and delivers it to the non-custodial parent.
Remember, just being the custodial parent, or receiving an executed Form 8332, does not mean your child is a qualifying child for tax purposes. We recommend consulting your accountant and an attorney to determine if your child meets the remaining factors stated above. Each individual situation requires an analysis of its specific facts and circumstances. [Disclaimer]
Our family law team at Naimish & Lewis can advise you on this and other dissolution and divorce related matters involving children. To schedule an initial consultation with an attorney at our firm, please contact us.