I am a contributor on the Web Site Avvo.com.  I answer legal questions in the Tax, Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, and Foreclosure Practice areas (mostly) posted by “Askers.”  The most common question, by far, asked in the Tax Practice area concerns child exemptions on taxes for divorced or separated parents.

So I thought it was a good area to post on our blog.  Generally, the parent who has custody (the “custodial parent”) is entitled to take the child exemptions on taxes.  The custodial parent is defined as the parent having custody for the greater part of the calendar year and the one who provides more than half of the child’s support.  The other parent (the “noncustodial parent”) may be entitled to the deduction when:

• The custodial parent releases or gives the exemption to the noncustodial parent for the year
• The child lives with the noncustodial parent for more than half the year

When both parents have joint physical custody of their child, it may not be clear which parent is entitled to the exemption. This can be avoided by agreeing, in advance,  on who will take the exemption and having the other parent sign a release (IRS Form 8332)  of the exemption and/or including your agreement concerning the child exemption on taxes in your Divorce Decree or Child Custody Agreement.

What should you do if the other parent claims the exemption when you are entitled to the exemption?  

I had a client call today who filed his return electronically, and his return was rejected because the noncustodial parent claimed the child exemption of taxes first.  He wanted to know what he could do. I told him, there are four steps to to take in this situation:

1. First, determine if you want to make an issue of the exemption.  If you do,
2. make SURE you are entitled to the exemption.
3. Next, print, sign and date your return and MAIL it to the IRS.
4. Expect to receive paperwork from the IRS – the noncustodial parent will also receive the same paperwork. Once you receive the paperwork from the IRS:

• complete the paperwork and send it back promptly.
• provide evidence that the child lived with you – school records are VERY persuasive.  But you could use Doctor visits, day care receipts, etc.  If your child has lived with you, you will find something to prove it.  The noncustodial parent will also have to complete the paperwork and send it back to the IRS.  The noncustodial parent will not be able to prove that your child lived with them – because your child didn’t.

I hope this post answers your questions about Child Exemptions on Taxes for Divorced or Separated Parents. If you have IRS problems, you need an attorney. You need me Steven Leahy. Call me (312) 664-6649 or Toll Free (866) 664-6647. 150 North Michigan Avenue, Suite 1120 Chicago, 60601