Claiming a dependent on your taxes can shave off a good amount of your tax liability.
Sometimes, the real issue lies in the rule that only one exemption can be claimed per dependent. This is an IRS rule, and one situation where absolutely no exceptions apply. So if there are two parents who are not filing jointly, and one child, you can see how this has all the makings of an impromptu game of tug-o-war.
So who wins? This question is asked to countless accountants, lawyers and tax professionals each day. The answer is simple. Accepting the answer is the tough part.
The custodial parent can claim the child as a dependent. The non-custodial parent cannot.
Who determines which parent can claim the child dependent exemption?
Contrary to popular belief, a court order will not determine which parent can claim a dependent child. You can wait on hold with the IRS as long as you want. The answer will always come down to federal law; not a state or county court order.
Custodial Parent VS. Non-Custodial Parent
Assuming your child probably refers to you as mom or dad, ‘custodial parent’ is typically not a term thrown around in most households. Generally speaking, the parent with whom the child lives for the majority of nights during the tax year is the custodial parent. The non-custodial parent is the other parent. If the child lived with each parent for the same amount of nights per year, then the custodial parent is the one with the higher Adjusted Gross Income.
Can a non-custodial parent ever claim the child dependent exemption?
In most situations, it’s assumed that divorced or separated parents are not on the same page when it comes to who gets to claim the child as a dependent. However, this is not always the case. It is still possible that parents can put aside some differences…at least when it comes to taxes. This would call for IRS Form 8332. This form allows the custodial parent to release the child’s exemption to the non-custodial parent.
This form is easier to complete than you might think. To release the dependent exemption for the most current tax year, the custodial parent will complete Part I of the form with the following information.
- Child’s name
- Tax year
- Signature
- Custodial parent SSN
- Date
To release the dependent exemption for any future tax years, the custodial parent will complete Part II of the form with the following information.
- Child’s name
- Tax year(s)
- Signature
- Custodial parent SSN
- Date
The custodial parent can also revoke a previous release of the exemption to the non-custodial parent using Part III of the form. The following information will be required.
- Child’s name
- Tax year(s)
- Signature
- Custodial parent SSN
- Date
If you would like even more information about the IRS Form 8332, check out our past article HERE!
Which parent can claim the Earned Income Credit (EIC)?
The custodial parent will always be the one who can claim the Earned Income Credit. Even if the custodial parent completes Form 8332 to release the dependent exemption to the other parent, that does not also tack on the Earned Income Credit.
Because of this rule, there may be a bright side for non-custodial parents. If the custodial parent can still claim the EIC after releasing the dependent exemption to the non-custodial parent, then it may be a little easier to negotiate completing Form 8332. Many parents who do not file taxes jointly choose this arrangement so that they may both get a break on their taxes.
So, what’s the bottom line?
The truth of the matter is the IRS does not double as a judge and jury. If the non-custodial parent files their tax return first with the child dependent reported, then they could very well be approved by the IRS and receive their refund. However – and that’s a big however – the custodial parent can dispute that claim, leaving the other parent with a fairly hefty tax bill.
Whatever your tax situation is this year, we can help. If you can relate to any of the questions above, then RapidTax might be just the right place to prepare your tax return. Plus, we offer 100% free phone and chat support. What are you waiting for, parents? Get filing today!
Photo via Steven Depolo on flickr.
I have a child with a man named Todd Eugene Harris we have a signed parenting plan by a judge which states that had Eugene Harris plans odd years and Elizabeth Mangrum is to claim even years for taxes. Last year Todd claimed Thomas on his taxes and he also claimed taxes for Thomas for 2016 which he was only supposed to claim for 2015 he needs to be reported to the IRS and I was not allowed to claim my son on my taxes because I was rejected due to the fact that Todd had claimed my son already. I’m currently taking Todd back to court to make a new parenting plan signed by the judge that I get to claim Thomas Harris every year due to the fact that I have him 78% of the time of the year the father only gets my son on the weekends and he only pays a child support monthly payment of $29 and he does not even comply with those payments. When I confronted him about this he told me it was an accident and it was his tax attorney who made the mistake which I do not believe it’s true. I ask Todd if he was going to pay me the money back and he told me no. He told me that I could just claim Thomas two years in a row for the future. I’m currently taking him back to court to get new paperwork signed I have documents that I can send proving that he is not to claim Thomas on even years. My phone number is 239-789-9373 greatly appreciate it thank you for any help please get back with me if you can.
You can paper file your return and include your supporting documentation to show that you have a decree stating that you were to claim your dependent and not your significant other. Based on this information, the IRS will then determine which parent gets to claim the dependent.