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Ability to Waive Federal Forms
The ability to take advantage of the Federal Dependency Exemption often results in significant tax benefits for the parent who is eligible to take this exemption. Thus, it is not uncommon for divorced or divorcing couples to argue regarding which parent should be allowed to take advantage of this exemption. The general rule concerning the dependency exemption is the custodial parent has the right to claim this exemption by default. However, if both parents agree otherwise, there are steps non-custodial parents may take in order to take advantage of this exemption.
It has become common for divorcing parents to negotiate and determine which parent will be able to claim the dependency exemption prior to finalizing the divorce and include a provision addressing the dependency exemption and other child related tax credits in their Marital Settlement Agreement. Although it has become common for divorcing couples to determine the issue of which parent will claim the dependency exemption during the divorce process, divorced parents who did not resolve this issue during the divorce process may still resolve the issue between themselves post-divorce. As mentioned above though, absent agreement by both parties, the exemption may only be claimed by the custodial parent or the parent with whom the child live for the majority of the year.
There are several ways a divorced or divorcing couple may decide to allocate the dependency exemption, especially if there are multiple children involved. For example, in a case involving only one child, the parents may agree for the non-custodial parent to claim the dependency exemption in all years following the divorce. Alternatively, the parents may agree that the custodial parent may claim the dependency exemption in even years and the non-custodial parent may claim the exemption in odd years. In cases where two or more children are involved, the parents may determine that the non-custodial parent may claim the exemption for the youngest child, while the custodial parent may claim the exemption for the eldest child.
If a divorced or divorcing couple does agree to allow the non-custodial parent to take this exemption for one or more children, the non-custodial parent must provide proof to the IRS that he or she has been granted the ability to claim this exemption. Depending when the divorce became final, a non-custodial parent must either attached a copy of their divorce decree to his or her tax return or include a completed IRS Form 8332 with their tax return.
If the divorce decree outlining a non-custodial parent’s right to claim the dependency exemption was entered on or before December 31, 2008, the non-custodial parent must file a paper return by mail and attach a copy of the divorce decree. A non-custodial parent must attach a copy of the divorce decree to his or her tax return each year the dependency exemption is claimed. On the other hand, if the divorce decree was entered on or after January 1, 2009, simply attaching a copy of the divorce decree will not provide sufficient evidence of a non-custodial parent’s ability to claim the exemption, even if the decree specifically grants the non-custodial parent that right. Non-custodial parents divorced on or after January 1, 2009 must submit a signed Form 8332. This form must be singed by the custodial parent, indicating that he or she waives their ability to claim the exemption for the child or children involved. In cases where the divorce decree specifically awards a non-custodial parent the ability to claim the dependency exemption, a non-custodial parent may compel an uncooperative parent to sign Form 8332 via a contempt of court action. For additional information regarding the dependency exemption as is relates to divorce, divorcing or divorced individuals should consult their Georgia divorce attorney, their accountant and IRS Publication 503, Child and Dependant Care Expenses.