Claiming a Child in a Separation or Divorce

The IRS rules for who may to claim a child as a dependent for income tax purposes. An agreement or decree of divorce or separation can override the IRS rules. If, though, there is no decree or agreement on the issue, then the IRS standards are determinative. If you are going through a NJ divorce or separation and have questions concerning who can claim a child on their tax return, you should consult with a family law attorney in NJ. 

For your son or daughter to qualify as a dependent for exemption purposes, the child:

• Must be under the age of 19 at the end of the year or under the age of 24 at the end of the year if a student, or any age if permanently disabled;
• Must have lived with you for more than half of the year, with exceptions for parents living apart;
• May not have provided more than half of their own support; and
• The child is not filing a tax return for any purpose but to obtain refund (child may not use their exemption for themselves on their own return).

When a child lives an equal number of nights with each parent, it is immediately clear that the child would be a qualifying child for both parents, yet only one person can claim the exemption, together with the other benefits, if the parent qualifies, of 1) the child tax credit, 2) head of household filing status, 3) child and dependent care expenses, 4) exclusion from income for dependent care benefits and 5) the earned income credit. Therefore, the IRS has “tiebreaker rules.” In this situation, the IRS will give the benefits to the parent with the higher adjusted gross income.

The more common situation is that one parent has more overnights than the other parent and is, thus, entitled to claim the exemption for the child as well as all of the other of the five benefits listed above, pursuant to IRS Rules and absent any agreement or court decree otherwise.

Where there is an agreement or divorce/separation decree that gives the exemption to the non-custodial parent, the custodial parent must sign an IRS form 8332, or a statement with the same information, that releases the right to claim the child as a dependent to the non-custodial parent. This statement must be attached to the tax return of the non-custodial parent. For divorce decrees or agreements pre-2009, a non-custodial parent granted entitlement to the exemption may attach certain pages of the decree or agreement to demonstrate the right to claim the child if the agreement has no conditions for the entitlement, such as “if the (non-custodial parent) is current on child support.” For decrees or agreements after 2008, that is not an option and the signed Form 8332 is required.

Keep in mind that merely having the right to claim the dependent exemption does not entitled the non-custodial parent to all of the other benefits listed above, though exemption generally allows claim to the child tax credit, the custodial parent would have the rights to the other benefits listed.

If your adjusted gross income exceeds certain limit set by the IRS, the exemption amount reduces on a percentage basis. If your adjusted gross income exceeds the phase-out figures by more than $122,500, whatever your filing status, the exemption amount is reduced to zero.

If you need to discuss tax exemptions for your child or children, call the Law Offices of Peter Van Aulen for a consultation with a family law attorney in NJ at 201-845-7400.