Who Gets the Tax Exemption?

There’s a misconception among many divorced parents about who gets to claim the tax exemption for the children. The rules are pretty simple, so let’s spell them out.

In a typical post-divorce situation where the parents together are providing more than 1/2 the support of the children, where the divorce decree is silent about who should claim the exemption, and where there has not already been an exchange of an IRS Form 8332, the exemption belongs to the parent with whom the child lived for more than 1/2 the year. This is true even in cases where the NCP (non-custodial parent) provides more financial support than the CP.

Let’s say you’re a CP who believes the NCP is claiming the exemption illegally. You have two basic choices; you can report the NCP to the IRS by calling the IRS Tip Line at 1-800-829-0433, or you can choose to do nothing. Judging from the experience of my clients, the IRS is not all that effective in matching up the tax returns of two parents claiming the same exemption. I’m sure it happens, but I know many cases where it doesn’t.

There are many cases where it makes more sense for the NCP to claim the exemption. As you can see on this chart on my web site, the exemption reaches its maximum value for Adjusted Gross Incomes of $40-70,000. Above and below that income figure, the exemption is worth less. So a CP to whom the exemption is worth less might agree to share it with the NCP using IRS Form 8332.

One last thought about exchanging the exemption. In my state of Alabama (and in many other states as well), the child support guidelines assume that the CP is keeping and using the exemption for the children. If the CP allows the NCP to use it, one would expect the NCP to provide some form of compensation for that value.

122 comments

  1. Jeanne says:

    I have been divorced since 1993. We signed a form 8332, designating exeptions, for all future years. My ex-husband would claim my daughter, I would claim my son. There were a total of 5 years that my ex-husband didn’t pay child support, but he still claimed my daughter as an exemption. I understand that it is up to him to relinquish the right to claim her, since the Form 8332 designates it as his right. Needless to say, he would not agree to let me claim her as an exemption.

    My question is this: My daughter is now 19 and is a full time college student. I pay for everything for her, including college tuition to a private school. When does the Form 8332 end? Age 18? 21? 24? I reside in the state of Wisconsin, incase this makes a difference when determining this. My ex husband has had no responsibility towards child support as of Feb 2008 (her 18th birthday). Am I able to now claim her as my exemption for 2008? Does the IRS recognize that at a certain age the Form 8332 no longer applies and it just drops off? I am concerned that he will try and claim her, regardless of her age and my financial support (and his lack of). He has told me that he has fallen into an IRS hole and owes considerable money. I can somehow see him trying to claim my daughter to help offset his 08 taxes. Please advise.

  2. Lee Borden says:

    The exemption for an adult belongs to the adult unless another adult is paying more than half her support. If that is the case, the adult paying her support is entitled to claim the exemption for her. Form 8332 is irrelevant for an adult.

  3. Clay says:

    I am confused with the IRS Form 8332, in my situation we share 50/50 physical & legal custody, etc… there is no CP or NCP, although I pay for all medical insurance, do I still need the 8332 form, and how would I fill it out as far as who is CP and who is NCP? Or should I just go ahead and claim our daughter even though she beat me to the punch, even though we agreed with the attorney I would get the exemption in all years? How would the IRS handle that? audit? or penalties? I wish everyone would just comply with the court order.

  4. Lee Borden says:

    I can understand your frustration. Your case is getting messy, and the normal advice (consult an attorney) probably doesn’t work because it may cost more than the exemption is worth. Unfortunately, I can’t give you legal advice in a bulletin board either. In a case like this, you’ll always need to weigh the two options available to you: (a) ask the court to make this right by forcing the other parent to comply with the order, and (b) acting as if the other parent has complied and claim the child.

  5. jason says:

    My decree of divorce (2000) stated tax exemptions for the minor children as follows… which ever parent pays more than 50% of the care of the children get to claim them. How do I know if I am paying more than 50%. I am the non-custodial parent but I have the children three days a week and pay child support. I provide everything at my house that she does at her house. How is this figured out?

  6. lisa says:

    I live in Iowa & my ex and I have joint legal custody of our 7 year old. We share 50/50 time, and varies by a few days. Since there are 365 days in a year, it’s my understanding that the IRS states that the child needs to spend 6 months +1 day with the child in order for the parent to claim. Also my ex makes 3 times more than me and I also read that the parent with the highest AGI claims the child. I keep track of her overnight stays between us. Here is the count:
    2007 Dad=184 days Mom=181 days
    2008 Dad=182 days Mom=183 days
    I’m assuming that in 2007 dad gets to claim her and 2008 mom gets to claim. Is this correct?

    Now here is the next factor to add into the equation. In our Joint Parenting Plan it states:
    INCOME TAX EXEMPTION and CHILD CREDIT (my ex’s name) shall receive head of household status and the dependency and credit for the minor child.
    What does that mean?
    Does a divorce decree supercede Federal & State laws?
    Am I able to claim anything on my taxes?
    If I am able to claim her, would I be in contempt of court or breaching?

  7. Lee Borden says:

    My guess is that you’re dancing on the head of a pin here. If you really want to take Dad on armed with your calendar, have at it, but it seems wiser to just let him have it and move on.

  8. lisa says:

    Thanks for getting back to me concerning this. The reason why this has came up, is my accountant is currently working on my 2008 income taxes, this is now my 2nd year I have used him. He is trying to find out what is legal here and make sure we file correctly. In 2007 I couldn’t claim her because her dad had her a few more days, but 2008 is in my favor. So according to the IRS I legally should be able to claim her.
    In my divorce papers, it starts out with the divorce decree, then goes into the Joint Parenting Plan. The only place it talks about the issue with income tax exemption in in the parenting plan. Is the parenting plan part of the divorce decree or considered different?
    I have been doing alot of reading concerning this issue and I am soooo confused. I found some statements where they say a divorce decree cannot override the federal law, IRS doesn’t care about this. Then I have found other statements that say the opposite. So what is the real truth here?

  9. nmom says:

    Hello,

    My ex husband and I had our marriage dissolved in 2006. In the dissolution agreement, it was agreed that I would be the custodial parent and recieve tax exemptions on all three of our child. We have both since remarried. The childrens father only sees them approximately 48 -55 days per year, basically every other weekend when his ‘schedule’ allows. He has never taken them for his allotted two weeks every year, since the divorce. He pays his child support. Currently I am unemployed going to school (full-time graduate studies). I worked up until august of last year, and now only work work-study. He has served me with paper to claim the children as tax exemptions for the 2009 tax year and future, stating that he supports more than half of their income. Based on his child support around $650 per month for all three, the dollar and cents do not add up. My husband who is retired on ss and military disablity has been supporting us while I have been in school, other than that my school loans help fill in were we are short…until I can graduate and obtain gainful employment in the medical field. I do have an attorney…but he says I have will not be able to utilize my current husband income as an argument….reading the IRC 152.e…and other pages about this it seems to go in my favor as the custodial parent who has them most of the time…am I wrong about this?

  10. Lee Borden says:

    No, you’re not wrong. It’s interesting that Dad chose to make this his issue. If I were he, I think I would be arguing instead that you are voluntarily unemployed. My guess is that you’re in a strong position, but your lawyer is the one who has the best feel for the pulse here.

  11. nmom says:

    true on the voluntary unemployment, cs support was calculated with my full-time employment pay…and only recently reflects as part-time.

  12. Angela says:

    If the custodial parent does not work and lets someone other than the NCP claim the child, is this also against the law? Shouldn’t the NCP be able to claim the child if the CP is unemployed?

  13. Lee Borden says:

    I’m not aware of any choice a parent has to assign a tax exemption to a non-parent. I’m also unaware of any provision that gives that right to the NCP just because the CP doesn’t work.

  14. Tamara W says:

    I ran into some problems this year with claiming our three children on taxes. My ex and I have been divorced for 12 years, for the first 6 years the kids had visitation with their Father, but resided with me for well over 50% of the time. In the last six years, due to the fact that their father lives in Germany, the children have lived with me 100% of the time. They have not had physical contact, but exchange calls and emails on a regular basis. When the agreement for shared tax claiming was agreed upon, it was based on 50/50 visitation. That never happened due to extreme distance/location between both residents. The children have been claimed according to this for the past 12 years, while living with me 100% of the time, and I would like to have this adjusted. Please help point me in the right direction of how I can go abut adjusting this.

    Thank you!

  15. George says:

    Hi Lee, My wife and I will be divorced soon (before the end of 2010). She started working at the beginning of October so I have paid the mortgage and all bills until recently. Will I be able to claim the children as exemptions for the 2010 tax year since I am only paying child support for November and December? Also, I am going to do a Quit Claim Deed for the house. Again, will I be able to claim the tax benefits since my wife only paid the mortgage for November/December? She will be the primary custodian.
    Is it better to hire a CPA or Tax Attorney for divorce tax issues?

    Sorry for all the questions. Your website and blog has great information and has been very helpful.

  16. Lee Borden says:

    I like your last question, because it’s the safest course in a case like this. I gather you and your STBX are not cooperative. If you’re not, you want to make sure you’re complying with the letter of the tax laws in the way you file. No need to hire a tax attorney. Just point out the question to your CPA when you get ready to file.

  17. laura ramirez says:

    hello I need advice. I got divorced three years ago. We got joint custody 50/50 and the decree stated he has permission to claim my daughter was said and the rule for him making more money and he claiming her was in effect. August of this year she went in to school to which she now lives with me and spends weekend with him. I want to claim her because shes now living with me full time for school but her father thinks that he has to claim her every year because he pays child support and the decree just says he has permission to claim her for tax purposes which I understood because of the previous rule. But the decree doesn’t state he has to claim her or that I cannot. Can I claim her or does he still have to?

    • Lee Borden says:

      You and Dad can agree to exchange the tax benefits of your child. If he won’t agree, you’re stuck until you persuade a judge to rule otherwise.

  18. Kgroark says:

    My custody agreement does not specify who claims our child as a dependent. We share 50/50 physical custody.

    For the past 8 years, my ex has claimed my daughter as dependent. I want to claim her this year as I feel it is unfair for him to continually enjoy the tax breaks.

    Who can legally claim her? Do we need to count exact nights? he says he should get the tax break because he is the higher earner? Is that true?

    • Lee Borden says:

      If you and he are exactly equal in parenting time, he’s probably right. Seldom is parenting time exact, however.

Leave a Reply

Your email address will not be published. Required fields are marked *