As a general rule, the custodial parent claims the children as tax exemptions, but the noncustodial parent can claim the exemption by written agreement or court decree, provided he or she contributes at least $600 toward the support of each applicable child during the year. Parents cannot split the exemption, but the Internal Revenue Service (IRS) provides ways to change exemption specifications from year to year as required.
If you are the noncustodial parent, claiming child exemptions after divorce requires more than simply filling out the right box on your federal tax return. This change affects the tax return of the custodial parent as well, so both parents need to obtain a copy of IRS Form 8332, carefully review the instructions and complete the form as appropriate. Although many exceptions exist, the general rules are as follows:
- Both parents must agree that the noncustodial parent will take the exemption or the provision must be part of the final divorce decree issued by the court.
- The agreement must be in writing, generally on Form 8332.
- The appropriate signed agreement must be attached to the tax return of the parent filing the exemption.
- The custodial parent can revoke the noncustodial parent’s exemptions for one or more future tax years with proper notification of the noncustodial parent.
The ability to claim the children as a tax exemption can have a significant financial effect on both parents. As an experienced California child support attorney, I raise this issue to my clients — particularly if they are custodial parents who cannot take advantage of this important tax benefit.
Divorce involves more than just making arrangements about the children and dividing marital assets. You need to understand the potential tax and other consequences of every decision, from custodial agreements to division of assets. I believe divorce attorneys need to bring these issues to their clients’ attention and recommend help from financial professionals for complex issues.