Overview

• Qualifying children include stepchildren, foster children, adopted children, natural children, siblings or stepsiblings, grandchildren and descendants of siblings or stepsiblings. To claim a child as your dependent, your child must be under 19 on Dec. 31 of the current tax year. However, if your child is in school full-time and under 24 by the end of the tax year, then you can claim your child as a dependent. Your child also must live with you for more than six months of the year for you to claim her as a dependent.
  
  

Divorced Taxpayers

• The Internal Revenue Service allows taxpayers to reduce their income tax liabilities by claiming their children as exemptions. Each qualifying child reduces a parent's tax liabilities by $3,650, current as of 2011. The code states that parents who spend more overnights during the year with their children are able to claim them as tax exemptions. The Internal Revenue Code even addresses situations where parents have split custody and spend an equal amount of overnight visits with their children. In these cases, the IRS allows the parent with the higher adjusted gross income to claim the exemption since she will derive a larger benefit from the exemption.
  
  

Divorce Decrees

• Although the Internal Revenue Code addresses which parent can claim his child as an exemption, it contains a limited exception for divorced and separated spouses with divorce decrees stating otherwise. Courts may circumvent the code's residency requirements and award the exemption to a noncustodial parent or parent who lives with his child for less than half of the tax year. As such, if you are the custodial parent, and your divorce decree states that your ex-spouse is entitled to the dependent exemption, you must waive your right to claim your child as an exemption, even if your child spends a larger number of overnights with you during the tax year.
  
  

Penalties and Tax Forms

• A binding court order pre-empts the Internal Revenue Code. As such, if you have a binding court order that orders you to waive your right to claim your child as a dependent exemption on your tax returns, you must allow your spouse to claim your child. If you fail to release your right and you claim your child in violation of a court order, your ex-spouse can bring contempt charges against you for violating a binding court order. If your divorce decree awards the dependent exemption to your ex-spouse, you may be required to sign IRS Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent. Your ex-spouse must attach this form to his tax returns to claim the exemption since he is not the custodial parent.