New 2009 Tax Law for Dependent Exemption

Hello,

I have a situation where my ex is to get to claim our daughter as an exemption in "odd" years and I am to claim her in "even" years. My daughter is now 17 and pregnant and living with me full time. Her father has basically written her off and not providing ANY support. He is not paying 1/2 of out of pocket expenses for medical costs (non-materinity) or buying clothes. We have a 50/50 joint custody with me being the primary custodian. So, since the beginning of April she has lived with me full time and me paying all her expenses with no support. I have told her father I should get to claim the exemption this year, but he is so stingy and greedy he doesn't care. I would go to an attorney, but attorney's are SO expensive and I'd probably pay more than I'd benefit. I have read conflicting info. on what the IRS will do WHEN (not if) we both claim her (and I will be claiming her child also). Some info. I've read that they will ignore the divorce decree (MSA) and use the rules for which make her my qualifying child. I clearly meet ALL of the guidelines for claiming her with the exception of the divorce decree. All it states is that we are to alternate years with him having odd and me having even. I am just hosed here or do I have a leg to stand on? Thanks for your input!

The matter was settled when you and your ex-husband signed off on the terms of your divorce settlement. If the divorce decree gives him unconditional right to claim the exemption then your husband is required to send a copy of the pages of the divorce decree to the IRS that allow him to claim the exemption. He does not need a signed form 8332 from you if the divorce occurred prior to 2009.

If you both claim the child then the IRS will process your returns but will send a letter to each of you explaining the rules. They will include a form 1040X and instruct the party not entitled to the exemption to amend their return. If neither party responds then they start digging more vigorously. Eventually one or the other person has to give up the exemption, and if the divorce gives it to him then you would be the one to repay the excess refund.

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Quoting newgrammy

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Hello,

I have a situation where my ex is to get to claim our daughter as an exemption in "odd" years and I am to claim her in "even" years. My daughter is now 17 and pregnant and living with me full time. Her father has basically written her off and not providing ANY support. He is not paying 1/2 of out of pocket expenses for medical costs (non-materinity) or buying clothes. We have a 50/50 joint custody with me being the primary custodian. So, since the beginning of April she has lived with me full time and me paying all her expenses with no support. I have told her father I should get to claim the exemption this year, but he is so stingy and greedy he doesn't care. I would go to an attorney, but attorney's are SO expensive and I'd probably pay more than I'd benefit. I have read conflicting info. on what the IRS will do WHEN (not if) we both claim her (and I will be claiming her child also). Some info. I've read that they will ignore the divorce decree (MSA) and use the rules for which make her my qualifying child. I clearly meet ALL of the guidelines for claiming her with the exception of the divorce decree. All it states is that we are to alternate years with him having odd and me having even. I am just hosed here or do I have a leg to stand on? Thanks for your input!

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I disagree with the other response that you received. If you can prove that the child resided exclusively with you for more than 6 months of the year, the IRS will side with you, despite what the divorce decree states.

However, your real problem will be with the state court, because you would be violating the decree and would therefore be in contempt.

I suggest that you file for contempt for your ex not contributing to the expenses he is required to contribute for, ask for sole physical custody and child support, and ask for the right to claim the tax exemption since he is not currently providing any support to the child.

You do not have to hire an attorney to do this, you can do it on your own. Forms and instructions are often available at your local courthouse, or online on your state government website.

Please see IRS Pub. 17 - http://www.irs.gov/pub/irs-pdf/p17.pdf - page 27 under the heading "Children of Divorced or Separated Parents" at the bottom of column 3. That should clarify the matter for everyone. If all of the conditions specified are met then the child will be the qualifying child of the non-custodial parent regardless of how much or how little time the child spent with that parent. The IRS will absolutely honor the order of the divorce judge under state law and they say so in the most basic of their publications, Pub. 17.

The OP mentions 50-50 custody. In such cases it would not be customary for child support to have been ordered since each parent would bear half the support cost based on custody. You would need to go to court if you would like to change that status of that. If support was ordered and is not being paid then that is another matter.

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Quoting Bubba Jimmy

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Please see IRS Pub. 17 - http://www.irs.gov/pub/irs-pdf/p17.pdf - page 27 under the heading "Children of Divorced or Separated Parents" at the bottom of column 3. That should clarify the matter for everyone. If all of the conditions specified are met then the child will be the qualifying child of the non-custodial parent regardless of how much or how little time the child spent with that parent. The IRS will absolutely honor the order of the divorce judge under state law and they say so in the most basic of their publications, Pub. 17.

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Only if the decree meets the qualifications to substitute for form 8332...and very few do. In a case like this one, where no child support is paid there is almost no chance that there isn't something in the decree that would disqualify it from being a substitute form 8332. The IRS is rejecting divorce decrees in large numbers....otherwise the large number of our clients who have to take their ex's back to court for contempt (to get the state court judge to remedy the matter) wouldn't need to do so.

The OP mentions 50-50 custody. In such cases it would not be customary for child support to have been ordered since each parent would bear half the support cost based on custody. You would need to go to court if you would like to change that status of that. If support was ordered and is not being paid then that is another matter.[/QUOTE]

The bolded truly is wrong. In a 50/50 situation some child support is still customarily paid. Generally by the parent with the higher income. However even if their incomes are identical child support is often paid, because one parent is paying the health insurance and/or daycare and those factor into child support calculations in most states. Its actually a bit rare for no child support to be paid unless the parents specifically agreed to that.

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Only if the decree meets the qualifications to substitute for form 8332...and very few do.

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This is very basic information that is covered in a basic tax preparation class. I have taught these for more than 20 years. However, I do not tell people to believe me because there is no way for them to know anything about me. Therefore, I post a link to authoritative IRS publications that describe very specifically how this works. And when you follow their instructions and publications it works just the way they say it works.

Now, would you kindly post some link to any supporting statment anywhere in the IRS' vast library of publications or instructions that supports what I've quoted above? A divorce decree does not substitute for form 8332. If it gives one spouse unconditional rights to the exemption, then they claim it. If there are conditions then 8332 is needed. I have seen and successfully filed with copies of the divorce decree submitted with form 8453 countless times. Rather than getting into one of these countless "I'm right because of the company I work for" arguments, please just support these things you claim I'm wrong about with something besides your say-so. Otherwise, it's just confusing to people as they consider your incorrect information.

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Quoting Bubba Jimmy

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This is very basic information that is covered in a basic tax preparation class. I have taught these for more than 20 years. However, I do not tell people to believe me because there is no way for them to know anything about me. Therefore, I post a link to authoritative IRS publications that describe very specifically how this works. And when you follow their instructions and publications it works just the way they say it works.

Now, would you kindly post some link to any supporting statment anywhere in the IRS' vast library of publications or instructions that supports what I've quoted above? A divorce decree does not substitute for form 8332. If it gives one spouse unconditional rights to the exemption, then they claim it. If there are conditions then 8332 is needed. I have seen and successfully filed with copies of the divorce decree submitted with form 8453 countless times. Rather than getting into one of these countless "I'm right because of the company I work for" arguments, please just support these things you claim I'm wrong about with something besides your say-so. Otherwise, it's just confusing to people as they consider your incorrect information.

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For tax year 2005 (I believe, it may have been 2006) the IRS issued guidelines that a for 8332 or something that substituted as its equivalent was needed in order for a non-custodial parent, (by the IRS's definition of non-custodial parent, not a divorce decree's) needed to be signed in order for the non-custodial parent to claim the tax exemption. The IRS specifically stated that they would not accept divorce decrees unless they met the criteria to substitute for form 8332.

The IRS's actions since that date have backed up that position.

The instructions on form 8332 clearly state that a divorce decree may be used if it meets certain specific criteria, including being non-conditional. However, being non-conditional is not the only criteria. You are focusing on the non-conditional aspect as if that's the only criteria.

For 2009, their position has again changed. They will now not accept a divorce decree at all (with some grandfathering). It must be a form 8332 or a separate declaration other than a divorce decree.

I have been taught, in my masters classes, and in my continuing education, that a tax professional does not rely on IRS publications as they are not "authority". I have been taught that a tax professional relies on the code, the regs, and the ongoing guidence regularly issued by the IRS.

The annual IRS continuing education seminars, as well as tax organization's (such as NATP) have been heavily addressing these issues since 2005.

However, the biggest point I have to make here, is that the custodial parent is defined by the IRS rules, not what is stated on a divorce decree. A divorce decree may state (for example) that a father is the non-custodial parent, but since then the child is living primarily with the father making HIM the custodial parent under the IRS's rules. In that instance the divorce decree becomes irrelevant.

In this thread, the divorce decree has become irrelevant as the living situation for the child has changed.

It is sometimes frustrating to have a discussion with you because you rely so heavily on the pubs and completely discount the guidence that is being given in the field...and what actually results when the IRS challenges a return.

Unless you can actually see someone's divorce decree, you cannot state that it qualifies to be used instead of a form 8332, simply because it has no conditions...and I am telling you right now, based on actual experience, that FEW qualify.

As I suspected, you cannot point to any external source for the information you say is true. That is how people get bad advice that costs them.

Did you even bother to read page 27 and 28 of Pub. 17? You could not possibly have read it because it is black and white. If the IRS states what I say in their official publications then I'll stand behind that. I have no experience with the IRS instructing one thing, and then doing the opposite "in the field" as you put it. I'd spend all my time in tax court if that was how they did it.

I don't mean to frustrated you, but when I give people advice that is straight from the IRS instructions it frustrates me when you find it necessary to repeately challenge and tell me I'm wrong with nothing you can point to that proves your point. I'm here to learn as much as anyone, but I can't accept what you say just because you say it and I don't ask my clients to accept the advice I give them just because I say it. I show them in the books, print it out, highlight it, and do what ever I need to so they know they're getting the best possible advice. And I warn them about tax professionals who pretend to know everything but can't show you any of it in writing.

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Quoting Bubba Jimmy

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As I suspected, you cannot point to any external source for the information you say is true. That is how people get bad advice that costs them.

Did you even bother to read page 27 and 28 of Pub. 17? You could not possibly have read it because it is black and white. If the IRS states what I say in their official publications then I'll stand behind that. I have no experience with the IRS instructing one thing, and then doing the opposite "in the field" as you put it. I'd spend all my time in tax court if that was how they did it.

I don't mean to frustrated you, but when I give people advice that is straight from the IRS instructions it frustrates me when you find it necessary to repeately challenge and tell me I'm wrong with nothing you can point to that proves your point. I'm here to learn as much as anyone, but I can't accept what you say just because you say it and I don't ask my clients to accept the advice I give them just because I say it. I show them in the books, print it out, highlight it, and do what ever I need to so they know they're getting the best possible advice. And I warn them about tax professionals who pretend to know everything but can't show you any of it in writing.

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I pointed to the instructions for form 8332.

I pointed to the IRS seminars and other professional organization seminars, which unfortunately, are not online to be quoted.

I pointed to the regs, which I personally don't have the time to hunt out the applicable ones here to satisfy you...nor the code sections.

I will continue to debate points that I believe you are inaccurate on, because even if I do not take the time to find the regs to satisfy YOU, hopefully the posters will understand that there is a "debate" on an issue and will seek professional assistance of their own in the preparation of their tax returns.

I work for a fairly large, local firm (not one of the big national firms who give their employees no more than basic training) and I work all year long, not just during the tax season. I have been a tax professional for 25 years. Our firm takes great pride in continuing education and in being as up to date as possible on tax law. Because I work all year long I spend a lot of time resolving IRS problems for clients and sitting through audits.

Because I am human I will occasionally be wrong...as will you.

On this one I believe its you, but ultimately it does not matter, as long as the poster understands that there is enough debate on the issue to get their own professional assistance.

I have yet to see a link to any source. You continuously tell me that I'm wrong based on what is in your head. When I tell another person they are wrong, I always post some external source so that they can see for themselves. You expect people to accept what you say because of who you are and what you know, but the truth is that we are both just anonymous people posting to a message board.

You can tell me I'm wrong about everything I post here if you like. And every time I'm going to ask for some source for your information. Perhaps one of these days you'll actually be able to do so. Until then, I will not accept your say-so about one of the few matters on which I actually do have in depth expertise. Others can evaluate our two approaches as they see fit.

Here is a link to form 8332 and its instructions: http://www.irs.gov/pub/irs-pdf/f8332.pdf

Note on page 2 of the instruction there is a special rule for children of divorced or separated parents. If you read it you will see that what I have said is exactly correct. Nowhere on this form is there any indication that the IRS will (or can) ignore the order of a state court judge.

Perhaps it would be useful if I explain where the IRS publications,forms, and instructions come from. They come from IRS staff who translate the tax code implemented by the congress into language that a lay person can understand so that they can comply with the law. The law recognizes the authority of state courts and state laws. That is why the IRS must accept common law marriage from those states that have common law. It is also why the IRS accepts the orders of state courts in matters of divorce. Now, their "out" is if there are conditions such as "so long as party A is current in paying the child support ordered, then...". The IRS has no way of knowing if a tax payer is current on child support, so the 8332 would then be required. Barring any conditional language the IRS has no choice, under the law, but to accept the court's order. If they ignored this as you say they would end up in tax court on a daily basis.