Dependent Question

[Bjorn]

Facts: Bitter divorce: All three kids live with Mom. Dad pays no support. Kids lived with mom, who is weathy, the entire year 2005. The divorce paperwork {from 2002} says dad can claim one child each year. Since the kids now live full time with Mom can we do anything about claiming all three kids.

[Lion]

Dependents

It's really a legal question more than a tax question. If ex earns so little he doesn't file, no one would be the wiser if she claimed all three kids. If husband files claiming one and she claims the same one (all three), they both may get IRS letters asking for documentation. He has a copy of the divorce decree signed by her giving him permission to claim one child. She could talk to her lawyer about the possibility of amending the decree. But, if he's poor and she's wealthy, ex might ask for spousal support or other amendments not to her benefit. She might be better off leaving well enough alone. She qualifies for HOH with the two she can claim. If she's that wealthy, she may find her dependent exemptions phasing out anyway.

[Ray]

I have to add my two cents here. The IRS doesn't really care what the divorce decree says they go by the what constitutes a dependent. I don't know the actual percentages that the custodial parent claims the kids but probably in the area of 99.9999% in cases like you just mentioned.
In this case the divorce degree could say that the dad gets all the children all the time and the custodial parent will still get to claim them if the dad is deadbeat.
What I find is that to avoid paperwork from the IRS you need to file before dad does i.e. who files first wins. His return will get kicked out if she has already claimed the kids. Now if he claims one and files first she will get a letter and disallow the exemption if she duplicates the child but she can still claim the child after clearing a bunch of IRS bureaucracy BS.

[Jesse]

It's my understanding that it would depend on how it is stated in the divorce decree. If Dad gets to claim them w/out any conditions he can attach the 1st page, page that states he can claim the child(ren) and final signed page in lieu of the form 8332. If condition must be met such as dad can claim IF current on child support then he needs a form 8332 or he may be out of luck.

Who files first doesn't make it right and will mess things up, but sooner or later, probably later, the correct person is going to end up w/the refund or balance due.

[Armando Beaujolais]

"The IRS doesn't really care what the divorce decree says they go by the what constitutes a dependent. I don't know the actual percentages that the custodial parent claims the kids but probably in the area of 99.9999% in cases like you just mentioned."

I disagree. The IRS does care what the divorce decree says, at least from a statutory standpoint. IRC section 152(e) deals specifically with children of divorced or separated parents. The divorce decree determines which parent is entitled to the dependent exemption. Actual custody is irrelevant to this issue if the decree says so.

Another rule is that the parent who does have custody for more than half the year must sign off on Form 8332, even if the exemption is given to the other parent in the divorce decree. That just means the custodial parent can block the ex from taking the exemption, not that the custodial parent can go against the decree.

From a practical standpoint, the IRS will give the exemption to the first person to file. The statement that the IRS doesn't care about the divorce decree would be accurate if you added "unless the IRS is forced to examine the issue because there is a dispute." If one parent takes the exemption first, and the other parent takes the exemption later, the IRS will grant the first to file, reject the second, and it will be all done with it unless the second parent makes noise. Then they will examine the situation and the divorce decree will be considered.

Dad is going to claim the dependent exemption. Whether he pays child support is irrelevant, unless there is a condition in the decree (have you read the divorce decree? Are you sure the thing actually gives away the exemption under the circumstances? If there's a clause in the decree that says he has to pay child support or all bets are off, that's your ticket to a pat on the back from your client). The rule kicks in when "one or both" parents provide support and custody. The only thing the Mom can do is to refuse to sign Form 8332. She might succeed in blocking him from getting the exemption, but it could be a big hassle with the IRS in the middle and she'd get nothing but satisfaction?

There are some divorce decrees that will substitute for Form 8332, but not many. They have to have unconditional release of the exemption to the noncustodial parent among other things. That's usually not the case.

File first to be in the driver's seat.