Our settlement agreement stipulates that we "split" the exemptions each year. I claim 2 this year..she 1. And it switches next year. The settlement agreement is silent on who is custodial and non- custodial parent. We share true 50/50 physical and legal custody. Can I just go ahead and file claiming two of the children without also appending a form 8332 or portions of the agreement. I ask because I usually electronically file. I can't do this if I have to provide a hardcopy of the form or the agreement. Thanks.
I heard of a judge who will lock you both up if you really did that to your children. Clearly they are with one parent for at least one minute more than the other.
I know that you had better get the dependency release signed, if not when the divorce papers were signed, then do it now.
Sure you can. There's a nifty signature page, I use an
8453, that you can send in with any hard copies that you need to. Someone at the IRS making minimum wage will shuffle around the building for hours on end trying to match up your papers to an electronic file, if only they knew where that file cabinet was.
-- Paul Thomas, CPA snipped-for-privacy@bellsouth.net
Just a reminder. If it's exactly 50/50 physical custody nobody gets exemptions for the kids, because they didn't live with either of you for more than half the year.
As long as everyone's getting along, sure.
As for your 50/50 arrangement, if you counted the days you'd probably find that it's not exactly 50/50, but that's irrelevant UNLESS you or your ex incurs child care expenses or is eligible for the Earned Income Credit. In those cases it matters a lot who the true custodial parent was for more than half the year. As for Head of Household filing status, as long as each of you has physical custody of at least one child more than half the year, both of you can claim HofH filing status.
With the change in tax law that took effect in 2005, it doesn't matter what the divorce or separation agreement says about who is the custodial parent. Under tax law, the custodial parent is going to be the parent who had physical custody for the greater part of the year. If you both separated in 2006 and you both had custody before the separation, then the custodial parent is the one who had physical custody for the greater part of the rest of the year. In addition, even though your agreement may state who is entitled to the exemption, it may not be hold up if the noncustodial parent claimed the exemptions and the custodial parent also decided to claim the exemptions. The noncustodial parent will need either the 8332 or a signed written statement that is equivalent to the 8332 or the divorce agreement states that the noncustodial parent is entitled to the exemption unconditionally, the year or years that the exemption is granted and that the custodial parent will not claim those exemptions for the applicable years. In addition, the noncustodial parent would have to attach the cover page of the decree, the pages that include the three items mentioned and the signature page that contains the signature of the other parent and the date. I know of one tax case that was lost by the noncustodial parent because the divorce decree that gave him the exemption was not signed by the other parent. It was only signed by her attorney.
By way of explanation...I used the phrase "true" 50/50 custody because, as I stated, there is no naming of custodial or non-custodial parent and the intent of the agreement is that the children do in fact spend half the time with me and half the time with her. To the extent that is possible...the agreement is written as such. There was no intent written into the agreement that would have the children be with one parent "1 hour more" than the other, for the purposes of establishing custodial rights. It's just not there. I suppose the kids spend more time with one than the other (truth be it would be with me...as I have taken the kids a number of times while she had to deal with work stuff....whereas I've not asked her to do same). But...that's a cumbersome thing to detail.
This can't be so, can it? I mean suppose a married couple decides to file separate returns. One or the other can claim the exemptions, can't they? One could argue that neither of the parents had custody more than 50/50 in that case.
Well...the senior judge of the court signed off on it. He'd be in the pokey with us!! And I might add...what we are "doing" to our children is allowing them to spend as much time with their father as with their mother. Alan..I find your input a little confusing. I'm not sure I get the gist. We lived together right up until the divorce was finalized (June 30, 2006). Indeed...we still effectively lived together for about a month thereafter. At no time were we separated such that the children were with one or the other of us more. In any event, nevermind the peculiarities of this year...the question holds for all subsequent years.
We have an agreement for this year (detailed in emails) that I take 2 specific children as exemptions this year and she the other. So there will no conflict there. Again...let me emphasize....the agreement and decree are SILENT on who is the custodial or non-custodial parent. Perhaps there is some definition in the tax code barring a clear delineation in the decree/agreement. I don't know. Fundamentally....I want to avoid having the refund help up because of this question (assuming it doesn't breeze thru). At the same time...I really rather avoid having to do the extra paper work. Perhaps it is just easiest to assume one or the other of us is custodial...and get the 8332 signed by that person. Alan...is there some place on the net I can go to read the new law (hopefully it's written so that an engineer can understand it!!)? I don't know...there doesn't seem to be a real clear answer on this. We (the ex and I) are not at odds on this. We agree on who claims who. I'm just trying to make sure all the i's are dotted and t's crossed. Thanks all.
For tax purposes the question is which parent had physical custody of the child more than half the year. Temporary absences ("Could you take them this weekend?") don't count.
These rules we're talking about are for divorced or legally separated parents. They don't apply to couples who are married.
As long as you don't both claim the same child there will be no processing problems.
There are five tax "benefits" of a qualifying child. For two of them, the dependency exemption and child tax credit, which travel together, you're free to split them as you choose, year by year, with or without paperwork with the previously-stated caveat about cooperation between you and your ex. The other three benefits are available only to the parent who had physical custody of the child for more than half the year. If neither parent had child care expenses and neither is eligible for the Earned Income Credit, the custody issue is moot. That leaves us with Head of Household filing status. If you both want to file as HofH each of you needs physical custody of at least one child for more than half the year. You haven't mentioned anything about the children's ages. If you've got one away at school, there's an easy solution since such absences don't count. You just make sure that this particular child's "permanent" residence is documented as the home of the parent who's going to claim that child. (Mail, driver's license, etc.) For children living together the books are closed on 2006. The parent that had physical custody of a child more days/hours/minutes is the only one who can claim HofH filing status based on that child. Going forward you have two choices. You can proceed as for
As a practical matter, the most significant danger is when there is conflict between the [former] spouses. If, as you say, all is agreed and your individual returns will not result in any competition for claimed exemptions, the likelihood is there would be no problem. The answers you have been given have been strictly to the letter of the law -- and reflect a general tightening of standards in the past two years. Informally, I would suggest you proceed with your cordial agreement, and resist the urge to make it a perfect world.
The IRS will not care which of you claims the children, as long as you both don't claim them. If you do, then you would need an 8332 signed to prove you had the right to claim them. In the event there isn't a signed 8332, then the parent who had the children the most days would be declared the custodial parent and would have the right to claim them. So go ahead and file, claiming the children you have agreed upon. Only if things get messed up and you both claim the same child would you have to go through the trouble of filing 8332. As a professional tax preparer, I have filed dozens of returns without an 8332 and never had a problem with it. Dennis
Tax law is not about "winners and losers", only the facts.
And truly, if custody actually works out to 50/50, with neither parent having ACTUAL (note the word, "Actual") majority custody, then neither gets the exemption. Period. No assumptions. Just the facts govern. No assumptions; just the facts.
And don't think any judge would spend time in the pokey with or instead of you. It's your responsibility to claim the child IF you have actual majority of the time custody.
The IRS is completely disinterested in divorces and the agreements made between divorced/separated parents. All they care about is that divorced/separated parents do not double up on dependents.
A prudent person would have hardcopies of 8332's to support their dependency claims.
Yes, there have been cases where the IRS has disallowed dependents because no party could prove they met the 50% plus test, but that is an administrative fiat tactic used against quarelling people who want the IRS to resolve their disagreements.
Amicable divorces are rare, but they do happen. Hopefully you will have one.
IRS Pub 17 and IRS Pub 501 explain it very well. As others have noted, neither taxpayer (separated, divorced or never married) will hear from the IRS unless they both try to claim an exemption for the same child, or both try to claim some other tax benefit using the same child. I advise all taxpayers who are the noncustodial parent to get the 8332 signed.
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