The dependency exemption for a child will be awarded to the parent who has physical custody of the child for the greater number of overnights during the calendar year. If the child spends an equal amount of time with both parents, the parent with the higher adjusted gross income will be allowed to claim the dependency exemption provided the child is otherwise eligible to be claimed as a dependent.
In order to satisfy the Internal Revenue Service's requirements for a qualifying dependent child, the child must meet four requirements: (1) the child must be designated as a child of the taxpayer; (2) the child must not have reached the age of 19 during the calendar year or must be enrolled as a full-time student and not reached the age of 24 during the calendar year; (3) the child must have the same principle place of abode as the taxpayer for more than one half of the year; and (4) the child must not have provided more than one half of his or her own support for the year.
Can a Noncustodial Parent Claim the Dependency Exemption
For tax years starting after 2008, the noncustodial parent can claim the exemption for a child if the custodial parent formally releases the exemption via IRS Form 8332. The child still must meet the IRS qualifications of a dependent. Since the waiver does not have to be permanent and can be revoked at a later date by the custodial parent, it is important to ensure the final order of child support requires the custodial parent to sign the dependency exemption waiver for the years that the exemption is awarded to the noncustodial parent. A copy of the waiver must be attached to the noncustodial parent's annual tax return.
For court orders entered prior to 2009, the noncustodial parent may claim the dependency exemption only if the order states all of the following: (1) the noncustodial parent can claim the child as a dependent without regard to any condition (e.g. payment of support); (2) the other parent will not claim the child; and (3) the years for which the claim is released.