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Taxes & Divorce

The IRS Child Dependency Exemption

Bottom line – only one child custody dependency exemption may be claimed. Sometimes, both parents will claim the exemption.  That generates a “letter from the IRS.  The exemption belongs to the party who has the child “mostly.”  That’s the primary or the person with the exclusive right to designate the residence of the child.  The exemption can be assigned to a parent by agreement, i.e., non-primary, usually but not always Father, is assigned the exception by agreement. Form 8332  For more information, click on the hyperlink.

 

General requirements for claiming the tax dependency exemption

  1. The taxpayer cannot be claimed as a dependent of another.
  2. The dependent must be a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada/Mexico for some part of the year.
  3. The dependent cannot claim himself/herself as an exemption on his or her own return.
  4. The dependent must be either a Qualifying Child or a Qualifying Relative.

 

 

Qualifying Child for the Tax Dependency Exemption

  1. The child must be the taxpayer’s son, daughter, stepchild, foster child, brother, sister, half brother or sister, stepbrother, stepsister or descendant of any.
  2. The child must be:
  • Under age 19 at the end of the year and younger than the taxpayer and spouse,
  • Under age 24 at the end of the year, a full-time student, and younger than the taxpayer and spouse,
  • Any age if permanently disabled.
  1. The child must have lived with the taxpayer for more than half of the year.
  2. The child must not have provided more than half of his or her own support.
  3. The child is not filing a joint return for the year.
  4. Only one person can treat a child as a qualifying child. A parent will trump any other relationship. The parent who has primary physical custody will trump the other parent. In the case of two parents with equal physical custody, the parent with the higher gross income will trump the other.

 

 

Qualifying Relative for the Tax Dependency Exemption

  1. The relative cannot be a Qualifying Child of anyone else.
  2. The relative must be a relative or must live all year as a member of the household.
  3. The relative’s gross income must be less than $3,900.00.
  4. The taxpayer must provide more than half of the person’s total support for the year.

If multiple parties provide support for the dependent, each party must apply the above tests and follow the priority set forth. If the dependent is in college, the taxpayer to whom the child returns when not in school receives the credit for the child’s time in college in terms of determining where the dependent lives.