divorced parents claiming education credits

[Bucky]

The situation is divorced couple in 2021 you lived apart the entire year. 21 year old son full time student lives with his father in 2021 who is filing head of household. Question is can the father (custodial parent) still release the dependent form (8332) to the ex spouse so she can take the education credit and recapture the $1400 stimulus payment they didn't get because of income limits. The father's income in 2021 would negate him from both. My feeling is since the student is over 18 the parents can't use the rule for "children of divorced or separated parents" but I can't find this written explicitly anywhere.

[TaxGuyBill]

Regulation ?1.152-4(d): "A child is treated as residing with neither parent if the child is emancipated under state law."

In short, that basically means Form 8332 does not apply after the kid is "emancipated", which is usually age 18 (but some states may be higher).


Also, read Examples 6 and 7 from that Regulation.

https://www.law.cornell.edu/cfr/text/26/1.152-4#c

[Bucky]

Thanks Bill. That confirms my line of thinking. There is a blurb in Pub 501 which mentions this.

[kathyc2]

I believe it needs to go through the courts for the child to be emancipated. Not simply being of a certain age.

[Twin Turbo Z]

We have had this and similar issues in the past. The IRS questioned the emancipation and all we had to do was write a detailed letter explaining the situation. The students then received their refunds.

[TaxGuyBill]

I believe it needs to go through the courts for the child to be emancipated. Not simply being of a certain age.

I had researched that before, and at least for this purpose, turning a certain age is considered being emancipated.

Examples 6 and 7 in the Reg support that, as they link turning 18 with being emancipated. "Child turns age 18 and is emancipated under the law of the state where Child resides"

[kathyc2]

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

If that is to be taken literally as at age 18, then how would the child qualify for the parent to file HOH?

First I've heard of this. If it's true there is a cut-off at age 18 for claiming, why would IRS pubs, TaxBook, etc, not state it?

[TaxGuyBill]

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

If that is to be taken literally as at age 18, then how would the child qualify for the parent to file HOH?

First I've heard of this. If it's true there is a cut-off at age 18 for claiming, why would IRS pubs, TaxBook, etc, not state it?

That is ONLY for purposes of determining custody for giving the kid away via Form 8332 (and it may be slightly older than 18 in some states).

[DoubleO]

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

If that is to be taken literally as at age 18, then how would the child qualify for the parent to file HOH?

First I've heard of this. If it's true there is a cut-off at age 18 for claiming, why would IRS pubs, TaxBook, etc, not state it?

As Taxguybill pointed out, this rule simply says that once the QC is over the age of majority, the rules for children of separated parents no longer come into play. That is, the parent with whom the QC spent the greater number of nights can no longer sign an 8332 allowing other parent to claim nor can the child be claimed under a separation or other agreement. This rule had been around for a LOnG time and is one of the reasons additional due diligence penalties were added for preparers. Not only do we need to know the law; we must also ask the right questions. If the young adult is a QC of one TP under all other rules for QC, only that TP can claim the tax benefits.