Dependency Status for a Child of Divorced or Separated Parents

Determining which parent is a child’s custodial parent for purposes of the dependency exemption of divorced or separated parents, how the custodial parent releases claim to the exemption and more.

February 2009
by Dennis Gaffney, et al./The Tax Adviser

For at least a generation, divorce has been part of the social landscape in the United States, so much so that the conventional wisdom is that 50% of all marriages end in divorce. Because minor children are often involved in divorce or separation, the question of which parent is entitled to any available dependency exemptions can arise. Only one dependency exemption is allowed for a qualifying child and, since a single exemption cannot be shared, only one parent may claim it. As a result, there is often confusion and/or conflict between the parents.

Prior to 1985, Sec. 152(e) provided that the child of divorced or separated parents generally was treated as having received over half her or his support from the custodial parent; thus, the custodial parent was entitled to claim the dependency exemption for the child provided all other requirements were met. However, the noncustodial parent would be entitled to the exemption if he or she provided at least $1,200 of support for the child and the custodial parent could not “clearly establish” that he or she provided more support than the noncustodial parent.

This statutory language often placed the IRS in the middle of emotional conflicts that presented difficulties of proof and substantiation. To ease the administrative burden on the Service and promote consistent enforcement in the area, Sec. 152(e) was amended in 1984 to award the dependency exemption to the custodial parent unless that parent waived the right to the exemption in favor of the noncustodial parent. The Tax Court deemed this amended version of Sec. 152(e) rationally related to the legitimate government interests of resolving factual disputes between former spouses.

This article has been excerpted from The Tax Adviser. Read the full article here (PDF).

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