Child over 18 of Divorced Parents

[Kram BergGold]

A recent post triggered this issue for me. A couple of times it has come up on this Board that a child over the age of majority (let's assume 18) is ineligible for Form 8332 treatment. So let's say the child is in college and does not provide over 1/2 of her own support. This means one of the parents may claim her. I assume then, that if I am doing the return for the non custodial parent and he or she tells me the custodial parent is not going to claim the child, that I just claim the child and hope the custodial parent does not claim the child. Any other opinions? I assume the IRS does not blink when a return shows an exemption for a non custodial child because the IRS' records will show the child is 18 or older.

[David1980]

At age of majority, who is the custodial parent?

[Burke]

A recent post triggered this issue for me. A couple of times it has come up on this Board that a child over the age of majority (let's assume 18) is ineligible for Form 8332 treatment. So let's say the child is in college and does not provide over 1/2 of her own support. This means one of the parents may claim her. I assume then, that if I am doing the return for the non custodial parent and he or she tells me the custodial parent is not going to claim the child, that I just claim the child and hope the custodial parent does not claim the child. Any other opinions? I assume the IRS does not blink when a return shows an exemption for a non custodial child because the IRS' records will show the child is 18 or older.

I cannot find any reference in the instructions that you cannot use this form for a child 18 or over. In fact, I would think the non-custodial parent would have to have it. The rules for qualifying child under age 24 and full-time student say he/she must have lived with the taxpayer over 1/2 of the year. Which means that parent claims, unless he/she gives it up.

[David1980]

I cannot find any reference in the instructions that you cannot use this form for a child 18 or over. In fact, I would think the non-custodial parent would have to have it. The rules for qualifying child under age 24 and full-time student say he/she must have lived with the taxpayer over 1/2 of the year. Which means the custodial parent claims, unless the CP gives it up.

There were a few court cases that made decision off "age of majority" and in Reg. 1.152-4(d)(1) it defines child as custodial of neither if child is emancipated under state law.

(d) Custodial parent— (1) In general. The custodial parent is the parent with whom the child resides for the greater number of nights during the calendar year, and the noncustodial parent is the parent who is not the custodial parent. A child is treated as residing with neither parent if the child is emancipated under state law. For purposes of this section, a child resides with a parent for a night if the child sleeps—

Which sounds to me like the special rules for divorced/separated parents no longer apply once you no longer have custodial/non-custodial parents. In which case, if kid doesn't meet the residency test for QC for the one parent and does for the other the one parent can't claim the child at all. And no more splitting of the tax benefits?

[dan doshan]

I cannot find any reference in the instructions that you cannot use this form for a child 18 or over. In fact, I would think the non-custodial parent would have to have it. The rules for qualifying child under age 24 and full-time student say he/she must have lived with the taxpayer over 1/2 of the year. Which means the custodial parent claims, unless the CP gives it up.

There are various references in the Pubs. probably in the instructions for form 8332, etc. in addition to that reference (court case) given in another post on this subject. The rule basically states that once a child reaches the age of majority the child is not considered in the custody of either parent and the rules for divorced and or separated parents do not apply. So the situation where say a 19 year old is in college and lives with one particular parent .. the child would be a qualifying child of that parent. That parent could not give a form 8332 to the other parent allowing them to claim the child. The other parent could not claim the child if the first one did not because that child is a qualifying child of another person.
It might be possible for the parent with whom the child does not live to claim the child under the qualifying relative rules if the other parent is not required to file a return other than for a refund and the parent claiming the child provides over 50% of the child's support etc.

[David1980]

http://www.irs.gov/irb/2008-33_IRB/ar06.html

b. Definition of custody

Section 152(e) includes two provisions relating to the concept of “custody:” (1) section 152(e) applies only if a child is in the custody of one or both parents for over one-half of the calendar year; and (2) in the absence of a qualified pre-1985 agreement, the noncustodial parent may claim the exemption only if the custodial parent (defined as the parent having custody for the greater portion of the calendar year) releases the claim to the exemption. The proposed regulations do not define the term custody.

The lack of a definition of the term custody in the proposed regulations may create ambiguity in determining whether section 152(e) applies. For example, a commentator suggested that the final regulations clarify whether a child who has attained the age of majority and is emancipated under state law is in the custody of one or both parents. The final regulations provide that a child is in the custody of one or both parents for more than one-half of the calendar year if one or both parents have the right under state law to physical custody of the child for more than one-half of the calendar year. However, a child is not in the custody of either parent for purposes of section 152(e), for example, when the child reaches the age of majority under state law. See Boltinghouse v. Commissioner, T.C.M. 2007-324. The final regulations include an example that illustrates that a child is not in the custody of a parent after the child attains the age of majority and is emancipated under state law.

[nwtaxlady]

20 yr old lives on Campus

What if... the 20 yr old full time college student does NOT live with either parent and lives on campus. Student does not provide more than 1/2 of his own support. So then who claims this college student?

[ATSMAN]

Is this a real situation or just hypothetical?

Of the 2 parents who provides more support?

[David1980]

What if... the 20 yr old full time college student does NOT live with either parent and lives on campus. Student does not provide more than 1/2 of his own support. So then who claims this college student?

Child is considered to live with taxpayer during temporary absences such as education. This rule likely gets stretched a bit. If the student isn't returning home for summer of the various school breaks and has no intention of moving back in with their parents after college does it really count as a temporary absence? Probably not. Just like student loans as a source of support of dependent provided support get ignored pretty often.

It does create an interesting hypothetical. If the "non-custodial" parent has the child during Christmas break and the "custodial" parent has the child over spring break, does education count as a temporary absence for both parents? Can both include the days the student spends at college for the residency test? Obviously if both parents claim the kid, the tie breaker is going to go to whoever had the greater number of nights but say only the "non-custodial" parent claims the child.

But to your question, let's say neither parent meets the residency test. Does either parent provide over half the child's support? If yes, that parent would qualify under qualifying relative rules (instead of qualifying child rules). If neither parent pays more than half the dependent's support, they might still qualify under a multiple support agreement. If one of the parents won't agree to sign a statement to not claim the dependent, or if the parents combined don't provide over half the child's support (perhaps scholarships do) then the child isn't a dependent of anyone. Dependent can claim themselves. Of course, they still can't get a refundable education credit (another often ignored rule) unless the dependent's earned income is over half their support.

[ATSMAN]

The 20 yr. old student can put an end to his parents fighting over by claiming his own exemption, if he had a part time job.

I have many clients who let their child keep their exemption so that they get a full refund of all taxes witheld.

[AJsTax]

The 20 yr. old student can put an end to his parents fighting over by claiming his own exemption, if he had a part time job.

I have many clients who let their child keep their exemption so that they get a full refund of all taxes witheld.

That might work with parents whose AGI is too high to take the education credits. Otherwise they are giving up very large tax credits that the student does not qualify for if he could be a dependent.

[Gary2]

Just to complicate matters, in Massachusetts, a child is not necessarily emancipated upon reaching the age of majority (18). But my sense is that emancipation and custody get complicated.

[Gary2]

The 20 yr. old student can put an end to his parents fighting over by claiming his own exemption, if he had a part time job.

I have many clients who let their child keep their exemption so that they get a full refund of all taxes witheld.

I think you're confusing a real choice with an illegal (yet common) choice.

The legal choice is that the parent can choose to forego the child's exemption, which allows the child to qualify for the AOC (but rarely for the refundable part), without claiming his own exemption.

The illegal choice is the belief that if the parents can, but don't take the exemption, then the child is allowed to. It doesn't work like that. If someone is eligible to be claimed as a qualifying child by another taxpayer, then that individual is not allowed to claim their own exemption, even if the other taxpayer declines to claim the qualifying child.

The gray area is that people rarely have enough details to accurate calculate the support. How many people keep records of their food purchases or eating out? I believe the technical term for this situation is "wiggle room".