Dependent Exemption - Separated Parents

[GTS1101]

My client's son lived with him and his mom for the first four months of 2010. The parents separated in April and from May 2010 through December 2010 the child lived with his mom. He spent the weekends with his Dad. The mom has no income and did not work. The mom lived with her family and they supported her. She is not required to file. Since the mom is not required to file and has no income under the regular rules the son is not her qualifying child. Does this apply to the rules of the divorced or separated parents too? The son lived the first 120 days with both parents. Then another 78 days with his Father on the weekends for the rest of the year. That would be 198 days so would the son be his qualifying child since he lived with him for just over six months? I would like to get my client EIC but I want to make sure I am applying the rules correctly. I am going back and forth one moment thinking he qualifies for EIC and then the next that he does not.

Thank You!
GTS1101

[solomon]

My client's son lived with him and his mom for the first four months of 2010. The parents separated in April and from May 2010 through December 2010 the child lived with his mom. He spent the weekends with his Dad. The mom has no income and did not work. The mom lived with her family and they supported her. She is not required to file. Since the mom is not required to file and has no income under the regular rules the son is not her qualifying child. Does this apply to the rules of the divorced or separated parents too? The son lived the first 120 days with both parents. Then another 78 days with his Father on the weekends for the rest of the year. That would be 198 days so would the son be his qualifying child since he lived with him for just over six months? I would like to get my client EIC but I want to make sure I am applying the rules correctly. I am going back and forth one moment thinking he qualifies for EIC and then the next that he does not.

Thank You!
GTS1101

I believe the mother (off the top of my head) is the custodial parent. The grandparents could claim the child or the mother could execute a 8332 for the father to claim the dependency and the child tax credit but no EIC.

By the way, for the father to qualify with the 8332 as the non-custodial parent, the parents must have provided more than half of the support for the child.

[AJsTax]

I believe you will find

that the IRS directions say the "most nights" spent with a parent is the determining factor. If he father had the children for 198 nights then HE is the custodial parent by IRS rules. dont care what the seperation decree says, if there even is one.
I have one father write on a calender every night when he has the children to be able to prove to the ex and to the IRS he actually is the custodial parent.
In this case IRS rule trumps local court.

[solomon]

that the IRS directions say the "most nights" spent with a parent is the determining factor. If he father had the children for 198 nights then HE is the custodial parent by IRS rules. dont care what the seperation decree says, if there even is one.
I have one father write on a calender every night when he has the children to be able to prove to the ex and to the IRS he actually is the custodial parent.
In this case IRS rule trumps local court.

§152(e)(4)(A)

The term “custodial parent” means the parent having custody for the greater portion of the calendar year.

The mother had custody approximately 280 nights; therefore, she is the custodial parent. Excluding the first 4 months in which both had custody, from April through Dec. the mother would have had twice the nights the father had for custody.

[oceanlovin'ea]

married?

I think you also have to find out if the parents were married. If not married, the 8332 is out the window.

Linda, EA

[solomon]

I think you also have to find out if the parents were married. If not married, the 8332 is out the window.

Linda, EA

See §152(e). It would be required.

[New York Enrolled Agent]

[QUOTE=oceanlovin'ea;113594]I think you also have to find out if the parents were married. If not married, the 8332 is out the window.
/QUOTE]

The Tax Court in King 121 TC No. 12 held that there this is no requirement for marriage for the purposes of §152(e). Unmarried biological parents can use Form 8332 assuming all conditions are met.

A snip from the decision: "We hold that the Lopezes are entitled to the deductions because (1) the special support test under section 152(e)(1) can apply to parents who have never married each other, ..."

[AJsTax]

well duh, i forgot

§152(e)(4)(A)



The mother had custody approximately 280 nights; therefore, she is the custodial parent. Excluding the first 4 months in which both had custody, from April through Dec. the mother would have had twice the nights the father had for custody.

to count the days together as hers too. do that sometimes. but I question at times if that is true. He was paying for everything but she gets credit for those nights?? probably does by rule, but should not.

[solomon]

to count the days together as hers too. do that sometimes. but I question at times if that is true. He was paying for everything but she gets credit for those nights?? probably does by rule, but should not.

The law is not necessarily fair.

[Gary2]

I'm not so sure there isn't an argument here.

152(e) says that if certain conditions are met, then the child is the qualifying child of the non-custodial parent. It doesn't say that the the child is the qualifying child of the non-custodial parent only if those conditions are met, or that if the conditions aren't met, then the child is not the qualifying child of the non-custodial parent.

It does say "notwithstanding (c)(1)(B), (c)(4), or (d)(1)(C)." I interpret that as "the non-custodial parent can claim under these conditions, even if the non-custodial parent doesn't meet the residence test of (c)(1)(B) or the QR support test of (d)(1)(C), or someone else would have superior claim under (c)(4). In particular, I don't interpret it as saying that the non-custodial parent loses the right that he might have under (c)(1)(B) by virtue of being the non-custodial parent.

In most cases, it's impossible for the non-custodial parent to satisfy (c)(1)(B). Hence this issue doesn't come up. But in the year of separation, it is possible for both parents to satisfy this paragraph, and this question arises.

In the present example, if both parents tried to claim, then the non-custodial parent would lose out. However, that's not because of failure to satisfy 152(e), but because of 152(c)(4)(B)(i) - a tie-breaker rule that only applies if both parents claim the child. So far, I think the non-custodial parent may have a case for claiming the child, even without the 8332, assuming the custodial parent doesn't claim the child.

However, there's another catch. Paragraph (e)(4) uses the term "having custody", while (c)(1)(B) uses the phrase "principal place of abode". While the non-custodial parent clearly has had custody for more than half the year, it's not at all clear that the child had the same principal place of abode for more than half the year. Weekends with dad seem more like a temporary absence to me, unless you could show through dedicated bedroom space, furniture, clothing kept there, etc. that it was a real home for the child and not a guest room.

It would be different if dad moves out June 1, kid stays with mom because that's the easiest thing to do, but decides on Nov 1 to move in with dad. In that case, clearly mom has the same principal place of abode for more than half the year, as well as being the custodial parent. But because it was a deliberate move, with the intent of being permanent, it's not a temporary absence and dad also has the same principal place of abode for more than half the year.

Am I missing something? Any counter arguments?

[GTS1101]

Thank You! Great discussion. And Gary appreciate your long thought out answer. Thanks for citing the tax code regarding the rules of separated parents. If I exclude the time they had the child together from Jan-April 2010 than the mother is clearly the custodial parent.

Thanks!

GTS1101