Qualified Child, Residency, & Temporary Absences

[Lion]

18 year old lives with Mom for 4 months, divorced Dad for 3 months, and a college dorm for 5 months. Mom paid $0 for college. Dad paid child support for 7 months and 65% of college plus some. (Daughter took out a loan and spent from savings and had a small scholarship.)

Divorce decree written years ago before Education Credits and before UDC. Intent was to have dependency Exemption alternate years with Form 8332, and then college years dependency exemption go to Dad who was to pay majority of support during those years.

Mom won't sign Form 8332. Now what? Does Mom get dependency exemption for the next 5 years while Dad supports daughter as long as daughter sleeps at Mom's house at least 1 more night than at Dad's? Or, does the 5 months temporary absence away at college add to Dad's 3 months to trump Mom? Or, does it add to Mom's 4 months since she had more to begin with? Does Mom get to claim an Education Credit or Deduction based on what Dad paid for tuition? Does Mom get to deduct Dad's education loan interest and daughter's? Does Dad get any tax benefit at all from supporting his daughter &/or and paying college costs?

Even though Dad paid 65% of college, daughter paid a lot of her own support, earning probably $10,000 last year after school and during the summer and in December and spent from her savings on her living expenses. Should I see if maybe daughter paid more than half of her own support? Then daughter would claim herself and all applicable credits and deductions.

Just can't get a handle on this one. I'm the stepmom. Easier to see it clearly when it's a client not related to me. And, trying to stay out of relationship between the parents that has been fairly civil for daughter's sake. My goal is to pay least tax for Dad and Daughter as a whole. Dad's MFJ no matter what, but no other minor children. Mom is HOH or single with no other children and probably makes more money, but not by much.

[jainen]

little pieces

You'll have to break this into little pieces and calculate each one. First get rid of some irrelevant baggage. The daughter is an adult now so there is no more custody issue and no custodial parent, and you don't need Form 8332. Dependendent exemptions follow tax law, so forget about the divorce papers.

You've already identified the primary math problem. Did the daughter provide more than half her own support? If she did not she will be a qualifying child of only one parent. You'll need some reasonable reason to give those college months to the father, like she left and came back there, she lists his address on the college app, or most of her stuff is there. Any other questions about support can go to the divorce lawyer; they won't affect your work. Make sure you are cleverer than his ex's tax preparer, and put some good documentation in your file. From there it should be pretty clear what credits and other tax benefits the father can claim.

By the way, don't be surprised if it turns out college is not a temporary absence.

[Lion]

Daughter

Thanx, Jainen. So, now that the daughter is 18, no more Form 8332? And, I know the divorce papers don't trump tax law, but Dad thought he was getting daughter's exemption due to his support when he signed them years ago. New rules only give him exemption if daughter lived with him more than with Mom. Just trying to see if he can add time at college to time in his house. Does the code actually specify who gets the "temporary" absences? (At least it's college and not hospital or jail or something!)

And, if he decides to not rock the boat and leave Mom with dependency, does he lose tuition credit/deduction and college loan interest adjustment as well? When the decree was calculated and written, it was to make Dad pay as much for these 5 years as he had when paying child support, but that included the tax benefits such as daughter's exemption and HOH (which is moot now since he remarried and is MFJ). Anyway, he may be paying more under the new rules, and to rub salt in the wound Mom may get some education benefits that were unforeseen back when they divorced. Will Mom actually get education benefits for monies Dad paid the college as long as daughter is her dependent? Doesn't seem fair. Glad my son paid for his own college!

[Unregistered]

Form 8332

The daughter is an adult now so there is no more custody issue and no custodial parent, and you don't need Form 8332. Dependendent exemptions follow tax law, so forget about the divorce papers.

I wouldn’t go into who should claim the dependency exemption. However, don’t throw away form 8332 yet. You must still use form 8332 if you are going to release the dependency exemption. Form 8332 is use for dependency of qualifying child or qualifying relative. In your case, the daughter could be your qualifying child. The child is under 19 or under 24 and a full time student. You can download the form from the IRS web site.