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As part of a child custody settlement agreement or divorce decree, many non-custodial parents receive a right to claim the dependency exemptions for their children on their taxes. A recent ruling by the United States Tax Court held that a non-custodial parent may be precluded from claiming dependency exemptions, even where they are awarded those exemptions by a court order, if they fail to file a completed Form 8332 with the IRS. Under the Internal Revenue Code, custodial parents are normally entitled to claim the dependency exemption for their children. One exception to this general rule is where the custodial parent releases the claim to the dependency exemptions for a particular year. Many divorce decrees and child custody settlement agreements provide that the non-custodial parent who pays child support will be allowed to claim these dependency exemptions. Under the tax code, in order for a custodial parent to release the dependency exemption to the non-custodial parent, he or she must sign either a completed Form 8332 or a statement conforming to the substance of Form 8332. Form 8332 requires a tax payer to furnish (1) the names of the children whose exemption is being released, (2) the years for which the claims are released, (3) the signature of the custodial parent confirming his or her consent to the release, (4) the social security number of the custodial parent, (5) the date of the custodial parent's signature, and (6) the name and the social security number of the parent claiming the exemption. Child custody settlement agreements and divorce decrees almost never contain all of this information. Therefore, filing those documents by themselves will rarely be sufficient for the IRS to allow the non-custodial parent to take the dependency exemption. The only way for a non-custodial parent to be certain that he or she is in compliance with IRS regulations is to make certain that the custodial parent completes Form 8332 for the years which the exemptions are released and that this form is filed by the non-custodial parent with his or her tax return. Failure to follow the strict adherence to this protocol opens the non-custodial parent to a substantial risk that his or her dependency exemption claim will be denied. § |
