Divorced Parents and Claiming Exemption and EIC

[Chowdahead]

I have two clients who are divorced with one minor child. They have a divorce decree signed in August 2009 establishing joint custody and placement with mother. The decree also gives the father the right to claim the child every other year on his income tax retuen, starting with TY2009. The child is with the father every Wednesday night and every other weekend and 3 weeks a year. They also have multiple signed 8332 until the child turns 18.

Does the father claim Single, with the child on his return as en exemption? While the mother is allowed to claim the child on her return merely for EIC purposes?

The father doesn't care about the EIC anyway because he is a few thousand dollars over the income limits. However, the mother could use the EIC because her income is a few thousand below the income limits for EIC.

Can they both claim HH, or does one have to claim Single and the other HH? The father claiming HH would obviosly be more beneficial to him due to the higher standard deduction. I did one of these several years ago based on a return done at H&R Block, but I can't find it.

Any thoughts?

[kcjenkins]

Mom claims the HOH because the child lives with her. She also gets the EIC, etc. Dad files as Single and claims the child's exemption, including the 8332, in years he's entitled. You should also inform him that Mom has the right to 'revoke' the 8332 in later years, even if the divorce decree gave it to him. But normally, as long as he pays his child support on time, that should not happen. However, if it does, she's within the IRS rules, so his only recourse is to go back to the divorce court for compensation from her. Which would probably cost him more than he'd get from the Mom.

[Pacun]

Since they have the forms already signed for the years to come, the father should be OK claiming the child every other year. Mother qualifies for EIC every year if otherwise qualifies because the child lives with her. HOH is another ball game. She can claim HOH if she supports the child more than 50%, which could perfectly happen every year. Father would not qualify for HOH ever in this situation, unles he has another dependent. Pretty much the same thing that KC said.

[Chowdahead]

That's exactly how I have the return setup, so sounds like we are all thinking along the same lines. Thanks guys!