Divorcing couples often fight about who will get to claim the child on his or her federal income tax return. After a divorce, only one parent can claim all the tax related benefits for a child, including, among some others, the dependency exemption and the child tax credit. Generally, according to the IRS, only the “custodial” parent can claim these benefits. To be considered the custodial parent, the IRS requires that the child meet the residency test. To meet this test, the child must live with the parent for more than six months of the year. When making this determination, the IRS will look to the number of overnights the child spent with the parent. In other words, the custodial parent according to the IRS is the parent with whom the child stayed for a greater number of overnights during the year. Thus, the parent who is awarded the most timesharing with the child will get to claim the tax benefits on the federal income tax return.
There is, however, one exception to this general rule when the non-custodial parent can claim the child for purposes of these tax benefits. To meet this exception, the following must be met:
- the parents must be divorced;
- the child did not provide more than half of his or her own financial support for the year;
- the child did not live along for more than half the year; and
- the custodial parent signs a written declaration authorizing the non-custodial parent to claim the child (Form 8332). This latter declaration must be attached to the return.
The fourth requirement is critical for divorcing parents and family law practitioners and where post-divorce issues may arise. Many divorcing couples and family law judges will often decide to alternate the tax related benefits for a child. For example, the divorce decree might provide that the Father gets to claim the child in odd numbered years, and that the Mother gets to claim the child in even numbered years. But without a court order or settlement agreement addressing the written authorization, there are no means to enforce the divorce order giving the non-custodial parent the tax benefits. This is because the IRS rules preempt an order from a family law judge and the IRS will not enforce a court order or settlement agreement that merely authorizes the non-custodial parent to the claim the child the tax return. Instead, the IRS will only allow a non-custodial parent to take advantage of the exemption if he or she provides the written authorization from the custodial parent.
As a result, the court order or settlement agreement must award the non-custodial parent the exemption and specifically state that the custodial parent must execute a waiver providing written authorization to the non-custodial parent to claim the child. This requirement has been codified in Florida Statute Section 61.30(11)(a)(8), which authorizes the trial court to order a parent to execute a wavier of the exemption, provided that the parent who is paying child support is current on his or her child support payments. The First District Court of Appeal recently addressed this issue in Spikes v. Spikes, NO. 1D17-4860, where the Court reversed and remanded an order that failed to provide that the custodial parent waive the exemption for odd years.
In sum, it is critical that the marital settlement agreement or divorce order contains specific language, mandating the custodial parent to execute the waiver. Without this language, the non-custodial parent may be without recourse, as the IRS is not obligated to allow the transfer of the tax benefits without the executed waiver. If the custodial parent refuses to execute the waiver, the non-custodial parent could move to enforce the divorce order with the family law court. The family law court would then have the authority to force the custodial parent to execute the waiver for submission to the IRS.