Peaceful Divorce

New IRS Rules for Claiming the Child Dependency Exemption

With tax season in our midst, the question of claiming the child dependency exemption is consistently posed by our clients. Here is a recent development that you should keep in mind. As you may know, the non-custodial parent can claim the child dependency exemption, as long as the custodial parent signs a waiver promising not to claim the exemption. This is typically accomplished by the use of IRS Form 8332 (which was revised in January 2009.) Recent amendments to IRS regulations provide that a release not on a Form 8332 must be a document executed for the sole purpose of releasing the claim. A court order or decree or a separation agreement cannot serve as the written declaration. The noncustodial parent can no longer attach certain pages from a divorce decree or separation agreement instead of Form 8332 if the decree or agreement was executed after 2008. If the decree or separation agreement was executed before 2009, the noncustodial parent can continue to attach certain pages from the decree or agreement.

If the release of the child dependency claim is for more than one year, the noncustodial parent must attach a copy of the written declaration to the parent’s return for the first tax year for which the release is effective, as well as to returns for later years. Further, the custodial parent who released the right to claim a child can revoke the release for future tax years by providing written notice of the revocation to the other parent. The revocation can be made on Form 8332, or other form provided by the IRS. A revocation not on the designated form, must conform in substance to the form, and must be in a document executed for the sole purpose of revoking the release. A taxpayer revoking a release may attach a copy rather than an original to the taxpayer’s return for the first tax year the revocation is effective, as well as for later years.
If a non-custodial parent claims the child exemption first, and without the custodial parent’s permission, he or she is likely to receive the exemption temporarily. However, once the custodial parent files his or her tax return including the exemption, and IRS notices that a child’s social security number has been included on two different tax returns, then both parties would be notified by IRS that only one party is entitled to the exemption, and the tie-breaker rule would be used to resolve this situation. This rule says that if two parents claim that a child as a dependent, the parent with whom that the child lived with the longest during the year, receives the exemption. If the child had spent the same amount of time with both parents, then the parent that had the higher adjusted gross income would get the exemption. The parent who was not entitled to the exemption would have to repay the tax, plus penalties and interest.

Views: 20

Comment

You need to be a member of Peaceful Divorce to add comments!

Join Peaceful Divorce

Comment by Belinda Rachman, Esq. on March 28, 2009 at 10:44am
I am in Southern California in North San Diego County.
Comment by Sue K. Varon on March 28, 2009 at 10:32am
Thanks, I will be posting articles consistently so I hope you continue to look for them. What part of the country do you practice in?
Comment by Belinda Rachman, Esq. on March 27, 2009 at 8:07pm
This is very helpful information to those of us who are working with couples with children.
Comment by Cynthia Tiano, Esq. on March 17, 2009 at 10:36pm
Thank you so much Sue for this valuable and informative post. Lots of practical information answering questions that are frequently asked! We really appreciate it!

Become an affiliate of the Happily Divorced! book and audio program! Let Reformed "Killer" Divorce Attorney, Cynthia Tiano, and Dr. Max Vogt, Marriage and Family Psychologist, take you on an adventure into the lives of two families going through the divorce legal system - one doing "legal battle" and the other creating a "peaceful divorce". Learn how to create a Win-Win from their experiences... HappilyDivorced.org


Events

Latest Activity

Robert D. Bordett, CFP, CDFA posted a blog post

How Important Is the Budget in Divorce Planning?

I think everyone’s least favorite word is BUDGET. Why don’t we want to hear that word? Think about it: We’re asking ourselves to do something we don’t want to do — or worse yet, someone else is asking us to do it. While we might not like them, having a budget does help. In divorce planning — whether you are going to litigation,…See More
Sep 18
Robert D. Bordett, CFP, CDFA posted a blog post

21st Century Parenting Plans

I remember when the default custody arrangement had one parent as the custodial parent, and the other parent was known as the “Disneyland parent.” They had their children every other weekend, and maybe once during the week for dinner. Today it is more common to see joint parenting time consist of one week on, and one week off or “two-two-five-five” time,…See More
Aug 15
Robert D. Bordett, CFP, CDFA posted a blog post

Including a Financial Professional in Your Mediation

Very often, couples who are divorcing amicably, or who have straightforward financial situations, will forgo meeting with a financial professional while they go through mediation. Though this may seem logical on its face, “going it alone” may result in unnecessary hardship and inaccurate calculations.  It is easy to simply look at a tax table today and say “I am going…See More
Jul 30
Robert D. Bordett, CFP, CDFA posted a blog post

What About the House?

Going through divorce means dealing with hundreds of details, some more important than others. One detail that merits extra contemplation is how to deal with the marital home.Does one spouse want to keep it because the children still live there? You don't want to disrupt their lives any more than is already happening. What if the children are grown? Do you still need that much of a house?Here are the three most common means of dealing with the house in divorce:Selling the house and dividing the…See More
Apr 24

Badge

Loading…

About

© 2019   Created by Cynthia Tiano, Esq..   Powered by

Badges  |  Report an Issue  |  Terms of Service