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Who Claims the Kids on Their Tax Return?

Illinois parents should review the IRS rules for claiming the dependent care exemption before filing taxes

For tax purposes, under IRS rules, only the “custodial” parent can claim a “qualifying” child as a dependent exemption on the parent’s tax return. A qualifying child under IRS rules is, generally, any child under age 19 that lives with one or both of the parents.

Who is the custodial parent?

Again, under IRS rules federal tax law, the custodial parent is the one person with whom the child lived for the greater number of nights during the year. A child is treated as living with a parent for a night under any of the following situations:

  • The child sleeps at that parent’s home
  • The child sleeps at that parent’s home and the parent is not present
  • The parent and child are together but away from the parent’s home (for example on vacation together)

If a parent works nights, that parent may still be able to claim as the custodial parent. IRS Publication 501 provides a method of including daycare within the calculation to determine which parent the child stayed with more.

And there are tiebreaker rules if necessary: 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.

How can a non-custodial parent claim the tax deductions?

The IRS lays out several necessary factors for a non-custodial parent to claim the exemption for qualifying dependents. 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 or orders from 2009 or later, IRS Rules require the non-custodial parent to file IRS Form 8332 with their tax return. Without the custodial parent’s written consent, however, the non-custodial parent is out of luck. With IRS 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 or earlier, they too can qualify if the custodial parent signs IRS Form 8832. However, there is a method to get around a custodial parent’s refusal to consent to the release of the personal exemption. Parents can attach certain pages from their decree in lieu of IRS 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

If a custodial parent regrets providing a release of the exemption from Form 8332, the custodial parent can fill out the revocation and file it with their tax return. The revocation of release of claim will be effective no earlier than the tax year after the revocation is filed; so, if the custodial parent files the revocation with their 2017 tax return, the revocation will not apply until the 2018 tax year.

What if IRS rules are inconsistent with a decree or order?

Many unmarried parents in Illinois 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 Supremacy Clause in the Constitution establishes that federal law generally trumps state law when dealing with the same issue. This means that the IRS may not respect a state court order over their own rules.

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 Illinois family law attorney.

For more information on this area, see our overviews of family law, divorce, and mediation and collaborative law.

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