Contest - claiming dependent child who wins?

[Terry D EA]

This is a new scenario for me and I hope someone has dealt with it in the past enough to give good guidance. Divorced couple, both are parents of the said dependent child. Child is under 17. Parents are granted joint custody under divorce decree. Now the fun begins, they have been alternating years claiming the dependent child. Now one parent wants to claim again this year by reason of keeping the child more than the other parent. So, I know the IRS rules are the custodial parent normally gets the dependency but who qualifies in this scenario? My take is who the child spends more than 6 months of the year with and the one who has the higher AGI. Yes, EIC and CTC will come into play here. Am I thinking correctly? Also, court orders have no effect on tax law or conditions set forth by the IRS correct?

[BulldogTom]

It will come down to the one who can prove the number of nights spent at their home.   That will be the only tiebreaker.  Whoever has the best paper trail for nights the child slept in their home will get to claim the child.  Support is meaningless, as is AGI in this scenario.  Custody means the child spent more than 1/2 of the year under that roof.   And the IRS could care less what the divorce decree says.

Tom
Modesto, CA

[Possi]

The parent with whom the child lived over half the year (where the child laid his head) wins the head of household filing status. If the divorce papers say they alternate claiming the child, and one parent is the primary custodial parent, that parent signs the 8332 giving ONLY the exemption to the non-custodial parent. 

HOH wins EIC and dependent care credit while the "exemption" wins the CTC. 

I always get an 8332, and if I can get one signed for "every other year" or "every odd (even) year" or "EVERY FOLLOWING year" I do. Whatever the initial papers designate.

[Pacun]

Possi,  you are correct but you don't have to assume that the custodial parent will get HOH. Nights spent wins EIC, dependent care AND CTC.

To clarify my position... think about this scenario.

My daughter gets divorced and moves with her son to the PACUN tower for which I provide everything, including but not limited to mortgage, food, gardener, maids, etc. My 26 year old daughter earned 20K and her son slept at the PACUN tower with my daughter 184 days. Regardless of what the court said and regardless of who claimed him last year, my daughter will file as single and get EIC, Dependent care (if any), and CTC.

[Cathy]

"Regardless of what the court says",  there is more to that theory.  The custodial parent can be setting her/him self up with Contempt of Court.charges if he/she claims the child when in violation of the order from the court.  And if the other parent's preparer has been on the ball and got the custodial parent to sign Form 8332 through his client (before walking out of court is a good time to do it), IRS will honor that form and let the non-custodial parent claim the child.  And no, IRS isn't honoring court documents (post 2008), they are simply honoring Form 8332.  

 

It took a while, but attorneys representing the non custodial parent are FINALLY seeing the importance of Form 8332.

[Pacun]

It is my understanding that even with form 8332 signed and sealed, the custodial parent can revoke it by claiming the child and the parent with whom the child spent more than half of the year will prevail. Otherwise the first rule of tie breaker would be:

1.- Parent with signed 8332 from custodial parent
2.- Parent with whom the child spent most of the days, etc.

Remember, we are not lawyers and we only do taxes, let's keep it at that level and let the courts decide. In any event, most of the time the custodial parent claims the child outside the agreed years is when the other parent is failing with the court order somewhere else. ie is late with child support payments, is not picking up the child on the specified days, etc.

[DANRVAN]

I have won a similar situation on appeal by proving dependents spent the most nights with my client.  Final document to appeal officer was 33 pages.  If you get to that point I will gladly help you organize for appeal.