Tax Status of Your Dependents After the Split
Section 152(e) of the Federal Tax Code provides that the custodial parent is generally entitled to the personal exemption for the qualifying child. To be a “qualifying child”, you must satisfy four tests:
- Age – the child must be under the age of 19 at the end of the tax year or under the age of 24 and be a full-time student
- Relationship – the child must be your child (biological, adopted, step, foster) or a descendant of one of them (grandchild) or your brother or sister (full, half, step) or a descendant of one of them (niece, nephew)
- Residency – the child must have lived with you for more than half the year
- Support – you must have provided more than half of the child’s support during the tax year
In cases where the non-custodial parent wishes to claim the exemption, additional requirements must be satisfied:
- The child receives more than one-half of his support during the calendar year from his parents and the parents are divorced, legally separated (either by decree or written agreement) or living apart for at least the last six months of the year; and
- The child is in the custody of one or both of the parents for more than one-half of the calendar year
In addition, to claim the exemption, one of the following documents must be attached to the return:
- The custodial parent releases the claim for the exemption (Form 8332 – See Section 152(e)(2)); or
- A multiple support agreement establishing who can claim the exemption (See Section 152(e)(3)); or
- A pre-1985 agreement granting the exemption to the non-custodial parent and said parent provides at least $600 for the support of the child during the tax year
What does this mean for me?
If you’re the custodial parent, you are probably entitled to the tax exemption unless you have agreed to allow your spouse to claim the child on his or her taxes. To be sure, you should review your divorce decree or separation agreement (from the court) to determine who is allowed to take the exemption.
What if I have joint physical custody?
The IRS does not allow for a single exemption to be “split” between the two parties in the same year. Parties who share physical custody of their children on an equal or almost equal basis will generally have an agreement as to handle the income tax exemption(s). If they cannot agree, the IRS will decide for them based on Adjusted Gross Income.