Which Divorced or Separated Parent May Claim the Tax Exemption?

Often divorcing parents spend a lot of attorney fees litigating their child custody and parenting time arrangements and a few months after the divorce is final, they wonder if they get to claim their children as a qualifying children on their tax return. Our Grand Rapids family law attorneys can help you with some answers.

This situation can be confusing because there are two competing authorities that control which parent may claim the minor children.  The first authority is the Internal Revenue Service.  The second authority is a court order, usually a final custody order or divorce judgment.  Sometimes, these two authorities seem to be in conflict.

The IRS code provides that the custodial parent may claim the minor child as an exemption for tax purposes.  The IRS codes do not really care and ignore what your divorce judgment or final custody order says and instead have their own definition of a custodial parent. 

According to the IRS code, a custodial parent is a parent with whom the child lived a longer period of time during the year. Sometimes parents equally share parenting time, and they have an equal right to claim their children for tax purposes. The IRS then will provide the right to claim the children as an exemption to the parent with the higher adjusted gross income (AGI).

On the other hand, court orders often address child custody, parenting time, and sometimes even who may claim the tax exemption.  The parents must follow the judge’s order, but the IRS will not.  What that means is that when you file your annual tax return, (unless there is an exception) you or your accountant must comply with the IRS code first, and the divorce judgment second.

Providing Examples for How the Tax Exemption Works 

Let’s explain this with some real-world examples.  Your judgment of divorce or final custody order may state the other parent is the custodial parent, but you exercised more parenting time this past year.  If the court order does not state who may claim the minor child for tax purposes, then the IRS provides that you, the parent with more overnights, may claim the child as an exemption.  Should you do this without a consultation with an attorney?  Probably not.  The cost of litigating the dispute after the fact may outweigh your tax savings.

Some court orders provide that the non-custodial parent may claim the minor child as an exemption for tax purposes. Your ex, who is the custodial parent, quickly filed a tax return early in January and claimed the exemption. When you file claiming the exemption as well, the IRS rejected your tax return because, contrary to the court order, your ex claimed the exemption.  Will the IRS honor your court order? No, they will not, and you will need to address this issue with the judge assigned in your case.

Sometimes the non-custodial parent will benefit more by claiming the children as an exemption for tax purposes.  For example, the non-custodial may earn a much greater income than the custodial parent.  Such an agreement needs to be outlined in the final court order and the custodial parent must file Form 8322, a Release of Claim to Exemption for Child by Custodial Parent.

If you want to claim your child as an exemption and your judgment does not provide you with that right or you have wrongfully been denied a right to claim your child as an exemption, contact our attorneys at 616-285-0808.