Know the rules before claiming a dependent
If you are a divorced or separated parent, the rules for determining which one of you can claim the children as dependents is confusing at best. A few years ago, the IRS created rules that provided a uniform definition of a child for purposes of claiming certain tax benefits such as the head of household filing status, the child tax credit, the dependent care credit, arid the earned income tax credit.
When parents divorce, the decision of who will claim the children is
generally outlined in the divorce decree. In most cases, the judge will
award to the noncustodial parent the dependency exemption for the
children because he or she 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 the child's personal exemption since there is no deduction for
child support payments.
This works great when the parents abide by the judge's ruling. There
are cases where they do not. This is when the trouble starts. Why?
Because the IRS doesn't care what the divorce decree states. The IRS
makes the assumption that the custodial parent is entitled to the
dependency deduction-period. The only exception to this assumption is
when the custodial parent releases the claim by signing Form 8332, Release of Claim to Exemption for Child of Divorced or Separated Parents,
or a similar statement. If Form 8332 is not used, a similar statement
must contain the same information-the name of the child(ren), the tax
year to which it applies, and the name and social security number of
the parent releasing the claim. The noncustodial parent can no longer
attach the pages of the divorce decree that states he or she is
entitled to the dependency exemption and satisfy the waiver
requirement, unless the wording in the decree includes the specific
wording as used on Form 8332.
In the event the custodial parent refuses to sign the waiver and claims
the children, the noncustodial parent cannot claim the same children.
If both parents claim the same children, the IRS will promptly send a
notice stating that there has been an error. Each parent's refund will
be adjusted to reflect the denial of the dependency exemptions until
the matter is settled. If the custodial parent still refuses to release
the claim to the other parent, the only recourse is to go back to the
judge that issued the original divorce decree and have the ruling
enforced. Until that is done, the IRS will award the dependency
exemptions to the custodial parent provided that parent can prove the
children lived in his or her home for more than half of the year.
|
