Dependency with Custody Change

[Karl J]

Karl J...What do you do for a living?

I'm a tax accountant.

 

[Zigner]

I believe that folks are arguing about tomatoes vs apples.

Yes, it is Federal law that actually controls who may take the exemption. HOWEVER, if the state court orders that the NCP should receive the exemption, then, if the CP fails to do so (by giving the NCP a properly completed form 8332), then the CP can be found in contempt by said court, even if Federal law allows for the CP to take the exemption.

Does anybody disagree?

 

[Karl J]

False. The divorce was PRE 2009. Federal law allows the divorce decree to take precedence over physical custody.

No.

Treas Reg 1.152-4(e)(5) "a written declaration executed in a taxable year on or beginning on or before July 2, 2008 that satisfies the requirements for the form of a written declaration will be treated as meeting the form of a revocation of written declaration"

Treas Reg 1.152-4(e)(1)(i) clearly states "a declaration is not unconditional if the custodial parents release of the right to claim the child requires the satisfaction of the non custodial parent meeting an obligation such as child support payment"

Couldn't be anymore clear.

 

[Karl J]

I believe that folks are arguing about tomatoes vs apples.

Yes, it is Federal law that actually controls who may take the exemption. HOWEVER, if the state court orders that the NCP should receive the exemption, then, if the CP fails to do so (by giving the NCP a properly completed form 8332), then the CP can be found in contempt by said court, even if Federal law allows for the CP to take the exemption.

Does anybody disagree?

I agree 100%

 

[LdiJ]

The rules for taking the exemption has changed in your situation. For 50/50 custody, the custodial parent is the parent with the higher agi. Since you now have more than 50/50 you are entitled to the exemption regardless of what your decree says. Your decree is a matter of state law. The dependency exemption is a matter of federal tax law. The federal tax courts don't care about what your decree says your deal with him is. Moreover, if your decree says he must stay current with child support, then he could never take the exemption if you are the custodial parent. You must unconditionally allow him to take the exemption, saying that he must stay current with child support creates a condition and therefore he technically could not take the exemption even if you both agreed to it

ARG!!!

Ok, reality check here...

The tax code and the IRS regs do define who is the custodial parent and who can claim what. That is absolute. The IRS defines the custodial parent as the person at whose home the children sleep most of the time. The IRS does not care what the divorce decree says other than giving it some weight in terms of proving who is the custodial parent.

HOWEVER, the state court also has a lot of control over the individual parents and what they do, therefore the state court CAN punish the custodial parent if that parent does not execute a form 8332 relinquishing the exemption to the non-custodial parent.

SO, if the divorce decree or custody orders state that the parents are to alternate the exemption, and that part doesn't get changed if custody gets changed, then it is quite possible that the custodial parent would be held in contempt if they do not allow the non-custodial parent to take the exemption.

However, at the same time, there can be many different scenarios where the judge would NOT hold the custodial parent in contempt. The devil is in the details.

 

[LdiJ]

I'm a tax accountant.

Karl, I am a tax professional.

As one tax professional to another you have an obligation to your clients that is more than just spouting federal tax law. You also need to understand and be able to explain to them what happens when your state court makes orders, and how they need to protect themselves there as well.

Its not good enough to simply spout federal tax law.

 

[Karl J]

Karl, I am a tax professional.

As one tax professional to another you have an obligation to your clients that is more than just spouting federal tax law. You also need to understand and be able to explain to them what happens when your state court makes orders, and how they need to protect themselves there as well.

Its not good enough to simply spout federal tax law.

The OPs facts have changed. She was at 50/50, where the deciding test is whom ever has the highest AGI is the custodial parent and gets the exemption. Her facts changed to where only she is the custodial parent and she gets the exemption. She can give him the exemption but it must be unconditional. Saying that he can have it only if he is current in child support creates a condition meaning that he could never take the deduction under these current facts. Whatever the divorce decree says does not change this.

He could bring her to state court, but what is he going to get?

 

[TheGeekess]

The OPs facts have changed. She was at 50/50, where the deciding test is whom ever has the highest AGI is the custodial parent and gets the exemption. Her facts changed to where only she is the custodial parent and she gets the exemption. She can give him the exemption but it must be unconditional. Saying that he can have it only if he is current in child support creates a condition meaning that he could never take the deduction under these current facts. Whatever the divorce decree says does not change this.

He could bring her to state court, but what is he going to get?

Go educate yourself on family law a little. Read over in the Family Law section if you want to know how the states view things.

 

[LdiJ]

The OPs facts have changed. She was at 50/50, where the deciding test is whom ever has the highest AGI is the custodial parent and gets the exemption. Her facts changed to where only she is the custodial parent and she gets the exemption. She can give him the exemption but it must be unconditional. Saying that he can have it only if he is current in child support creates a condition meaning that he could never take the deduction under these current facts. Whatever the divorce decree says does not change this.

He could bring her to state court, but what is he going to get?

He is going to get her fined by the state court, and ordered by the state court to give him a signed form 8332. She can also be ordered to pay him what he would have gotten had she obeyed the order in the first place. If she still disobeys the court orders it can even get her jailed.

While federal laws control federal taxes, state laws control divorce/custody/child support and state court judges make orders as to who gets the exemption for the children. Unless form 8332 is completely eliminated one cannot ignore that.

Again, you are properly stating federal tax law. You are simply ignoring the consequences of not obeying state court orders.

 

[Leah2975]

Straight from irs.gov:

Post-1984 and pre-2009 divorce decree or separation agreement. If the divorce decree or separation agreement went into effect after 1984 and before 2009, the noncustodial parent may be able to attach certain pages from the decree or agreement instead of Form 8332. The decree or agreement must state all three of the following.
The noncustodial parent can claim the child as a dependent without regard to any condition, such as payment of support.

The custodial parent won't claim the child as a dependent for the year.

The years for which the noncustodial parent, rather than the custodial parent, can claim the child as a dependent.

The noncustodial parent must attach all of the following pages of the decree or agreement to his or her tax return.
The cover page (write the other parent's social security number on this page).

The pages that include all of the information identified in items (1) through (3) above.

The signature page with the other parent's signature and the date of the agreement.

 

[Leah2975]

No.

Treas Reg 1.152-4(e)(5) "a written declaration executed in a taxable year on or beginning on or before July 2, 2008 that satisfies the requirements for the form of a written declaration will be treated as meeting the form of a revocation of written declaration"

Treas Reg 1.152-4(e)(1)(i) clearly states "a declaration is not unconditional if the custodial parents release of the right to claim the child requires the satisfaction of the non custodial parent meeting an obligation such as child support payment"

Couldn't be anymore clear.

Straight from irs.gov:

Post-1984 and pre-2009 divorce decree or separation agreement. If the divorce decree or separation agreement went into effect after 1984 and before 2009, the noncustodial parent may be able to attach certain pages from the decree or agreement instead of Form 8332. The decree or agreement must state all three of the following.
The noncustodial parent can claim the child as a dependent without regard to any condition, such as payment of support.

The custodial parent won't claim the child as a dependent for the year.

The years for which the noncustodial parent, rather than the custodial parent, can claim the child as a dependent.

The noncustodial parent must attach all of the following pages of the decree or agreement to his or her tax return.
The cover page (write the other parent's social security number on this page).

The pages that include all of the information identified in items (1) through (3) above.

The signature page with the other parent's signature and the date of the agreement.

 

[Karl J]

Straight from irs.gov:

Post-1984 and pre-2009 divorce decree or separation agreement. If the divorce decree or separation agreement went into effect after 1984 and before 2009, the noncustodial parent may be able to attach certain pages from the decree or agreement instead of Form 8332. The decree or agreement must state all three of the following.
The noncustodial parent can claim the child as a dependent without regard to any condition, such as payment of support.

The custodial parent won't claim the child as a dependent for the year.

The years for which the noncustodial parent, rather than the custodial parent, can claim the child as a dependent.

The noncustodial parent must attach all of the following pages of the decree or agreement to his or her tax return.
The cover page (write the other parent's social security number on this page).

The pages that include all of the information identified in items (1) through (3) above.

The signature page with the other parent's signature and the date of the agreement.

All that this is saying is that you can attach part of your divorce decree instead of filing out Form 8332.

 

[Karl J]

He is going to get her fined by the state court, and ordered by the state court to give him a signed form 8332. She can also be ordered to pay him what he would have gotten had she obeyed the order in the first place. If she still disobeys the court orders it can even get her jailed.

While federal laws control federal taxes, state laws control divorce/custody/child support and state court judges make orders as to who gets the exemption for the children. Unless form 8332 is completely eliminated one cannot ignore that.

Again, you are properly stating federal tax law. You are simply ignoring the consequences of not obeying state court orders.

He would have gotten $0 for the reasons I already stated

 

[Leah2975]

All that this is saying is that you can attach part of your divorce decree instead of filing out Form 8332.

And the IRS WILL take the divorce decree and give the dependency to who it states in the decree. Before I was given full custody my ex husband had the higher AGI almost every year, and claimed the child EVERY YEAR. And every year it was due to me I sent the decree in, and the IRS gave us the dependency. If your divorce is Pre-2009 State Law DOES matter with the IRS is what im stating.

 

[Leah2975]

And the IRS WILL take the divorce decree and give the dependency to who it states in the decree. Before I was given full custody my ex husband had the higher AGI almost every year, and claimed the child EVERY YEAR. And every year it was due to me I sent the decree in, and the IRS gave us the dependency. If your divorce is Pre-2009 State Law DOES matter with the IRS is what im stating.

Wait wait wait...the divorce decree IS conditional on child support. So why is it when I sent in the decree they accepted it? It does state that it cannot be conditional on support and it is.