Divorced parents - who can claim credits

[Gary2]

Most child support arrangements cease at a child's age 18. The divorce decree normally specifies whether this is the case or not, and if such has occurred, then the non-custodial parent would be hard-pressed to prove support. I had a case where the non-custodial parent could prove it, the custodial spouse did not work, and the 8332 was not required once the child attained age 18 (per the IRS) as it was the age of majority in this state.

This sounds like the non-custodial parent was claiming on the QR rules (unless it predates those rules). In theory, those could apply even when the child was below the age of majority.

[Gary2]

As has been outlined above, the Tax Court in Boltington, Kaechele and Ferguson, ruled based upon the age of majority. When Treasury wrote the regulations I believe they royally screwed up. In TD-9408, released in July 2, 2008, they specifically introduced "emancipation" into the formula when it had not been used as a measuring stick before. I've spoken with the contact person of TD-9408 and I think they simply assumed that age of support and emancipation were the same. In most states they are. Not all.

If you reside in a state where both the age of majority and emancipation are 18 years old, then Form 8332 simply doesn't work. You can't release someone no longer in your custody. For those in the states where there are different age of majority and emancipation statutes, I believe you can rely on Reg. 1.152-4(d)(1) and use an 8332 if your child has not been emancipated.

Oh, what a tangled web.

Kaechele, TC Memo 1992-457 seems to be the oldest of these cases. I could only find it online at a Russion domain, http://www.taxpravo.ru/sudebnie_dela..._and_Kathryn_G, Assuming that text is accurate, the decision uses the language "considered emancipated under the law of the State of Ohio." Ferguson can be found at the same Russian site, and again uses the language "considered emancipated under State law, section 152(e)(1) is inapplicable."

Boltinghouse can be found at the Tax Court web site. Far be it for me, as a non-lawyer, to criticize the court, but this decision clearly uses language inconsistent with the wording of the previous decisions. A web search for the age of emancipation in VA turned up conflicting opinions, but I don't think it would affect the decision.

More interesting to me is the D'Amours case from the tax court site. Here the language changes mid-paragraph, "age of majority in Massachusetts at 18 ... considered emancipated under State law". However, in this case the child wasn't enrolled in college, so he wouldn't have met the condition I mentioned earlier, where a child wouldn't be considered emancipated at age 18 if he were still in collage.

Perhaps if I were in a state where emancipation is cut and dry, I might treat things differently. But it's not cut and dry in MA, and making legal conclusions that would be better done by a family law attorney is not part of my job.

[Burke]

Most child support arrangements cease at a child's age 18. The divorce decree normally specifies whether this is the case or not, and if such has occurred, then the non-custodial parent would be hard-pressed to prove support. I had a case where the non-custodial parent could prove it, the custodial spouse did not work, and the 8332 was not required once the child attained age 18 (per the IRS) as it was the age of majority in this state.

[ttbtaxes]

As has been outlined above, the Tax Court in Boltington, Kaechele and Ferguson, ruled based upon the age of majority. When Treasury wrote the regulations I believe they royally screwed up. In TD-9408, released in July 2, 2008, they specifically introduced "emancipation" into the formula when it had not been used as a measuring stick before. I've spoken with the contact person of TD-9408 and I think they simply assumed that age of support and emancipation were the same. In most states they are. Not all.

If you reside in a state where both the age of majority and emancipation are 18 years old, then Form 8332 simply doesn't work. You can't release someone no longer in your custody. For those in the states where there are different age of majority and emancipation statutes, I believe you can rely on Reg. 1.152-4(d)(1) and use an 8332 if your child has not been emancipated.

[Jesse]

As far as I know, they're not. In Massachusetts, a child isn't emancipated if he's still living with parents and attending college, even though he has reached the age of majority. You must look at the law in the specific state to determine this.

The difference is one of parental responsibility. Reaching the age of majority means the child may sign and be bound by contracts, etc. Being emancipated means the parents have no more obligations. Thus the Massachusetts view is that the parents under such circumstances still have an obligation to provide for the child's support.

So could you still use the Form 8332 in Massachusetts, or would it become facts and circumstances?

[Gary2]

If the dependency law is treated as "let's make a deal," then where does one stop. There are several court cases in which the "age of majority" is cited pertaining to the dependency.

The language in the regulations is "emancipated" under state law. Although emancipation and age of majority may have some different nuances, for federal taxes and dependency I believe they are comparable.

As far as I know, they're not. In Massachusetts, a child isn't emancipated if he's still living with parents and attending college, even though he has reached the age of majority. You must look at the law in the specific state to determine this.

The difference is one of parental responsibility. Reaching the age of majority means the child may sign and be bound by contracts, etc. Being emancipated means the parents have no more obligations. Thus the Massachusetts view is that the parents under such circumstances still have an obligation to provide for the child's support.

[solomon]

If the dependency law is treated as "let's make a deal," then where does one stop. There are several court cases in which the "age of majority" is cited pertaining to the dependency.

The language in the regulations is "emancipated" under state law. Although emancipation and age of majority may have some different nuances, for federal taxes and dependency I believe they are comparable.

§152-4 deals at length with dependency and divorced or separated parents. From §152-4(d):

A child is treated as residing with neither parent if the child is emancipated under state law.

In other words, §152(e) is out the window and §152(c) or §152(d) rules apply.

[Jesse]

I am with Solomon on this. If the college age child is over the age of majority for the
state where they live then the non-custodial parent cannot claim the dependency for
this child at all unless they meet all the requirements for dependency (live with for
over 6 months) regardless of what the divorce agreement says.

I agree with Earl and Solomon on this too. If the kids are now of legal age and college students, yes they can be a qualifying child of one of the parents. However, it is the parent who they spend the greater amount of nights, with school being a temporary absence. If the parents want to get together to determine where the child did indeed spend the greater number of nights, that is up to them, but the Form 8332 no longer applies.

[oceanlovin'ea]

sorry

It was late....and I was tired...not usually that mean.

It still sounds a little to me like the parents have to come to some kind of agreement about this situation.
But with most divorces that is not what usually happens.

Linda, EA

[AJsTax]

Earl, etc .I disagree

If the dependency requirements are met for either parent to take the child, the time away at school is a temporary absence by rule. If the child does not by himself provide more than half his own support then he is the dependent of his parents. The custodial parent can give the right to the non custodial parent and then that parent has the right to all available credits. If the child does not give the school information to the parent that is claiming him then the child is in violation of the court decree.
We can not as paid preparers just decide that we dont think the father should be allowed to take the dependency, we must follow the law.
In all my years of doing this and handling the child in college issue thousands of times, I have had two (if I remember correctly) students that actually qualified to be no ones dependent after doing all the questions and dependency worksheets. Almost 100% of the students full time in college are still the parents dependent.

[Earl]

Dependency

I am with Solomon on this. If the college age child is over the age of majority for the
state where they live then the non-custodial parent cannot claim the dependency for
this child at all unless they meet all the requirements for dependency (live with for
over 6 months) regardless of what the divorce agreement says.

[oceanlovin'ea]

He can't claim the education credit if they don't tell him how much was paid for tuition. Maybe he will agree to give mother the money (education credit) if she tells him how much tuition was paid.

If he doesn't cooperate, I wouldn't let him have the credit either.

Linda, EA

[solomon]

... the person claiming the exemption has the right to claim the credit.

♫♫♫♫♫
Agreed.

[Gary2]

The only credit the non-custodial parent can claim is the Child Tax Credit (age permitting) when claiming the children - the custodial parent is entitled to the rest of the credits if the criteria are met.

This is the way it's often taught when dealing with the separated parents rule, where the custodial parent keeps the EIC and Dependent Care credits, and only the CTC goes to the non-custodial parent.

But it's only taught that way because the education credits are a subject unto themselves. Pub. 970 makes it clear that the person claiming the exemption has the right to claim the credit.

[solomon]

The only credit the non-custodial parent can claim is the Child Tax Credit (age permitting) when claiming the children - the custodial parent is entitled to the rest of the credits if the criteria are met.

The custodial parent must execute a Form 8332 ( or something containing that information) for the non-custodial parent to attach to his return.

Addendum:

If the child in college is of majority age, (and probably emancipated) then that child is not really in the custody of either parent. Therefore, a 8332 for that child would be meaningless. You should check your state law on this because it could have a bearing on any education credit.