Overview

• The Internal Revenue Code contains special considerations for divorced and separated taxpayers. Because claiming a dependent has the benefit of reducing a taxpayer's taxable income, parents often disagree as to which parent may take advantage of the dependent exemption. Generally, the parent who spends more time with a child is entitled to claim the dependent exemption. Typically, this is the custodial parent, or the parent with primary physical custody. In most states, noncustodial parents are required to pay child support to custodial parents.
  
  

Independent Duties

• A parent's right to claim his child as a dependent on his tax returns is not contingent upon the fact that he pays child support. A parent's duty to pay child support is based on state laws. Parents obligated to pay child support may be able to claim their children as dependents on their tax returns if they spend more than half of the tax year with them. The IRS looks at the number of nights that parents are responsible for providing for their children. Thus, a parent who pays child support can claim her child as a dependent if she spends more than six months, consisting of nights, with her child.
  
  

Shared Custody Rules

• Parents who share custody of their children must follow the federal tax rules to determine which parent spends more nights with his minor children. According to the IRS, if parents spend an exactly equal number of nights with their children, the parent with the higher adjusted gross income is able to claim the exemption, absent a written agreement or court order stating otherwise.
  
  

Form 8332

• Courts can order that one parent waive her right to claim her child as an exemption. Parents can also agree to waive their rights without a court order. For instance, to expedite the divorce process, parents may agree to waive their rights to the dependent exemption to make their divorce proceed more smoothly and without judicial intervention. If a court orders the waiver or parents agree to it through written agreement, they must sign IRS Form 8332 releasing their claims and noncustodial parents must file their forms with their tax returns.