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It's tax time and if you're divorced and were awarded the right to claim your child or children as a dependent(s) on your tax return, here's what you need to know about filing your taxes properly.
The Internal Revenue Code sets out the law about who is entitled to claim a child as a dependent and how to claim it on your tax return. Generally, the dependency exemption for children of divorced parents goes to the parent who has custody for the greater part of the calendar year.
In making this determination, the IRS counts the number of nights a child spends at each parent's home. However, there are exceptions; the most common being when a custodial parent agrees to transfer the right to claim the dependency exemption to the noncustodial parent. This transfer of the right to claim the exemption is a negotiated term of many divorce agreements and is usually written into divorce decrees. If you are uncertain, check your divorce papers.
The requirements for the noncustodial parent to claim the exemption on a tax return are:
1. The custodial parent must expressly waive their right by signing IRS Form 8332;
2. Form 8332 must be attached to the noncustodial parent's tax return; and
3. The Form may only be used for waiving the dependency exemption.
Form 8332 can be executed for a particular year, specific years, or all future years. You can find the form, and fill it out, on the IRS website. See link below.
If you are the noncustodial parent, it is important to make sure you obtain the form and have it signed by your ex-spouse. In earlier years, the IRS allowed one to attach other written documentation to support ones right to claim the exemption, such as your Marital Settlement Agreement or divorce judgment. However, the IRS no longer allows the use of alternative documentation, and noncustodial parents must attach Form 8332 to their tax returns.