Who can Claim the Dependent Child Exemption?

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It is sometimes argued that the parent paying child support should be able to claim the Dependant Child Exemption. According to the 1985 Deficit Reduction Act, as amended by Regulation in July of 2008, the parent with whom their child under the age of 19 resides for greater number of nights of the year is entitled to the exemption, with some exceptions. The three exceptions are:

1) The parent who is otherwise eligible for the exemption if they enter into an agreement with the non-custodial parent not to claim the exemption, and the non-custodial parent attaches Form 8332 to their tax return for the year (IRC §152(e)(2));

2) The rule does not apply when the child is treated as having received over half of their support from a person under a multiple support agreement (IRC §152(e)(3)); and

3) The rule does not apply to a divorce judgment in effect prior to January 1, 1985, which provides that the non-custodial parent can claim the exemption if the non-custodial parent provides at least $600.00 for the support of the child during the calendar year (IRC §152(e)(4)).

Notwithstanding these provisions of the Internal Revenue Code, there have been cases where family law judges have ordered the custodial parent to execute a release of their claim to the exemption in favor of the non-custodial spouse for a period of years, alternating years, or providing that the non-custodial spouse may purchase the right to the exemptions from the custodial parent. Whether the court makes such an order greatly depends upon the facts of each case, such as the relative financial positions of the parties.