This piece is obviously not geared towards married couples, as they most likely file joint returns. However, recently divorced families and couples who have children out of wedlock are often faced with this very question. Therefore, we thought it would be a good topic to educate families on how the government treats the dependency exemption. After all, the more dependents you claim, the less you will have to pay in taxes.
According to the Internal Revenue Services the custodial parent is allowed to claim the minor children on the federal income tax return and get the exemption. A long time ago, moms would typically get custody of the child or children and dads typically only saw their kids every other weekend, so it was very easy to figure out. However, times have certainly changed! Nowadays, our office help negotiate pretty detailed, and sometimes, complicated parenting schedules that often involve children going back and forth between household throughout the year to spend time bonding with each parent almost equally. So what happens then?
Well, the IRS basically says simply, the parent with whom the child lived for the greater number of nights during the year is entitled to claim the dependency exemption. The other parent is referred to as the noncustodial parent and generally cannot claim the exemption. However, there are ways the noncustodial parent can claim the minor child as a dependent.
- Have it placed in writing and approved by the court. Whenever faced with this issue, we always place a section regarding claiming a child in our agreements. If you are able to enter into an agreement with your former spouse or ex-lover, stipulate to who will claim the child(ren) and when. The IRS will honor this arrangement.
- We suggest that parents agree to alternate claiming the child so that one parent claims the child as a dependent in odd numbered years and the other in even numbered years. If there is more than one child in play, then it might be best if each parent claims a child.
Also, the payment of child support or the lack thereof may affect the above clause in an agreement. For example we often use the following language in our agreements
The Parties agree that the Husband shall be entitled to claim the deduction for the dependency exemption regarding the Child whenever either Party is entitled to claim such dependency exemption under §152(e) of the United States Internal Revenue Code of 1986, as amended, provided that by December 31st of each calendar year, the Husband shall have made all child support payments required for that year under the provisions of this Agreement.
Therefore, depending on the particular situation of course, if Dad or Husband doesn’t make his child support payments, he may not be able to claim the exemption for that year. Bear in mind, every situation is different, but we wanted to give you an idea of some things to think about when discussing this topic.
Please note, Occena Law will be processing/preparing individual tax returns this year, for a free quote please contact us at 781-629-5147.