Which Divorced Parent Gets to Claim the Kids in Taxes?

The federal rules on dependent exemptions for Minnesota parents doing their tax returns

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Many unmarried parents in Minnesota have divorce or custody court orders that designate which parent receives the dependent exemption. However, this designation is often made without reference to IRS rules. The IRS says only the “custodial” parent can claim a “qualifying” child as a dependent exemption on the parent’s tax return. The Supremacy Clause in the Constitution establishes that federal laws generally trump state law when dealing with the same issue, so what happens when the court-ordered exemption is inconsistent with IRS rules?

Who is the custodial parent?

Under IRS rules, the custodial parent is the parent with whom the child lived for the greater number of nights during the year. The other parent is the noncustodial parent. If the parents divorced or separated during the tax year and the child lived with both parents before the separation, the custodial parent is the one with whom the child lived for the greater number of nights during the rest of the year.

A child is treated as living with a parent for a night if the child sleeps at that parent's home, whether or not the parent is present, or in the company of the parent, when the child doesn’t sleep at a parent's home (for example, the parent and child are on vacation together). There is an exception for a parent who works at night (see Publication 501), which allows a parent who cared for the child more days than the other parent to claim as custodial parent.

If the child lived with each parent for an equal number of nights during the year, the custodial parent is the parent with the higher adjusted gross income.

Can a non-custodial parent claim the exemption?

If unable to demonstrate they are the custodial parent under IRS rules, the non-custodial parent can still claim the exemption, but must meet several requirements. First, the parents must be either:

  • divorced under a divorce decree
  • separated under a written separation agreement
  • living apart at all times during the last six months of the year

For unmarried parents with decrees from 2009 and after, IRS rules require the non-custodial parent to file Form 8332 with their tax return to claim the dependent exemption. Without the custodial parent’s written consent, the non-custodial parent is out of luck. With Form 8332, the non-custodial parent can claim the dependent exemption if these conditions are met:

  • The child received over half of their support from one or both parents during the year (public assistance payments are not considered support provided by a parent)
  • The child was in the custody of one or both of the parents for more than half of the year

For non-custodial parents with divorce decrees from tax years 2008 and prior, there is a method to get around a custodial parent’s refusal to consent to the release of the exemption. Parents under pre-2009 divorce decrees can attach certain pages from their decree in lieu of Form 8332 if those pages state the following:

  • The non-custodial parent can claim the child as a dependent without regard to any condition – such as the claim being conditioned upon payment of support
  • The other parent will not claim the child as a dependent
  • The years for which the claim is released

Can a custodial parent revoke a release?

If a custodial parent regrets providing a release of the exemption from Form 8332, the custodial parent can fill out the revocation portion of the form and file it with their tax return. The revocation will be effective no earlier than the tax year after the revocation is filed, so if the custodial parent files the revocation with their 2018 tax return, the revocation will not apply until the 2019 tax year.

For parents who believe the other parent is not properly claiming the exemption, there may be no other option for that parent than to file a motion in court. For parents in the process of deciding support issues, they will want to ensure the other parent follows any agreements. To do so, parents may want to first discuss their options with an experienced Minnesota family law attorney.

Minnesota

For parents who believe the other parent is not properly claiming the exemption, there may be no other option for that parent than to file a motion in court.

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