As the door is leaning toward its close on the income tax filing season, it may be beneficial to discuss how the dependency exemption on income tax forms may apply when parents with minor children divorce. In general, child custody issues are a matter of Florida law for people in the Sunshine State. But, the federal dependency exemption is governed under federal law.
The Internal Revenue Service says that the general rule when it comes to which parent may claim a child as a dependent on income tax forms rests on where the child spends more time during the tax year. If the child is with one parent for more nights than the other, the parent with whom the child spends the greater amount of time is considered the custodial parent for the purposes of the child dependency exemption.
The general rule has an exception. Under federal law, parents may agree to modify who may claim a child on income tax forms. Some parents may negotiate an agreement in a divorce to split the exemption, such as by alternating years. The IRS does not allow both parents to claim a child in a single tax year. But a non-custodial parent may claim the child in even years, for example, while the custodial parent claims the child in odd years. A non-custodial parent may negotiate the claim the exemption for every year, or for a set number of years as the child grows older.
The IRS has a document -- IRS form 8332 -- for parents who have agreed in a divorce to modify the dependency exemption rule. The custodial parent must sign the form, which is then submitted with the non-custodial parent’s tax return.
It is important to note that the rule does not impact child support payments, which are not deductable by the paying parent, and are not taxable income for the parent entitled to receive payments on behalf of supporting a child, according to the IRS.
Source: The Huffington Post, “Children of Divorce: Who Gets the Tax Exemption?” Stann Givens, March 13, 2014