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Friday, January 31, 2014

Income Tax Dependency Rules for Children of Divorced Parents

JC Leahy, MA Accounting
For parents who are divorced (and also legally separated, or have lived apart for the last six months of the calendar year) these are the rules to determine who gets to claim the children as dependents..

Generally, the dependency exemption for children of divorced taxpayers will
go to the parent who has custody of the child for the greater part of the calendar year. Periods of custody are measured by the number of nights in which the child resided with the parent. When the child spends an equal number of nights with each parent, the parent with the higher adjusted gross income receives dependency exemption.

In addition, the child must have been in the custody of one or both parents for more than one half of the calendar year.

There are three exceptions to the rule that a custodial parent is entitled to the dependency exemption.
 

  1. If there is a multiple support agreement that allows the child to be claimed as a dependent by a taxpayer other than the custodial parent, the multiple support agreement governs.
  2. When the custodial parent agrees to let the other parent claim the child as a dependent for income tax purposes, the IRS accepts that.   The agreement must be in writing and attached to the non custodial parent's tax return for each year the exemption is released.
  3. When a pre-1985 divorce decree or separation agreement grants the exemption to the non custodial parent and the non custodial parent provides at least $600 for the support of the child for the year

A word to the wise:  When there is confusion about who gets to claim the child as a dependent, the parent who filed his or her tax return FIRST has the "high ground" in that argument. :)

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