by Milandria King, LL.M of Cordell & Cordell, PC
When married individuals file joint tax returns, they collectively claim their children as exemptions. Divorced parents, however, are not permitted to file jointly. This may lead to discussions or even heated debates regarding who has the right to claim the children as dependents on the federal tax return. As may be the case with some divorced couples, only one parent may be a legally recognized parent, thus that parent would have the right to claim the exemption. With other parents, where both parties are legal parents, the parties may agree on which person will claim the exemptions. This may be reasonably based on who stands to benefit greater financially from the exemption or who needs the exemption more considering both incomes. Some couples are able to decide that they will claim the child in alternating years so long as the appropriate forms are completed and submitted to the I.R.S.
When a situation arises where a divorced couple cannot reach a meaningful agreement regarding which party will claim the children as exemptions for income tax purposes, and the decision must be made in the absence of a court order or other legally binding contract, the I.R.S. has five (5) tests to use for the determination of which party is entitled to claim the exemptions.
The first test is referred to as the Citizenship or Residency test. If the child was not a citizen or resident of the United States, Canada, or Mexico for some portion of the tax year during which an exemption was sought, you will not be able to claim this child as an exemption. This test is often expressed as the most reasonable of the tests to be considered in this article.
While the first test is straightforward enough, the second test, the Relationship test, is a bit more convoluted. If the child you wish to claim as an exemption lived with you for the entire year, as a member of your household, and the child is related to you by birth or adoption, you are entitled to claim the child as a dependent for tax purposes, otherwise, this exemption is not available to you. Exceptions are made for minor absences from the household.
The Joint Return test will prohibit a parent from claiming a minor child on his taxes if the child is entitled to file a return with another individual. This situation is rare and generally only occurs when the child is married.
With the Gross Income test, the parents must consider the income of the child. For instance, if the child earned more than $2,800, was over the age of nineteen at the end of the tax year, or was a student over the age of 24 at the end of the tax year, neither party may claim the child on his or her income tax returns.
The final test is often touted as a true test of whether an exemption is warranted. It is referred to as the Support test. With this particular test, if you provided more than half of the child’s support for the year and passed the other four tests discussed earlier, then you are entitled to an exemption for the child on your federal tax return.
Remember that even in lieu of the above-referenced tests, you and your former spouse may enter into an agreement regarding which of you will claim the child as an exemption.
Milandria King is a Senior Attorney in the Memphis, Tennessee office for Cordell & Cordell, P.C., admitted to practice law in the state of Tennessee. Additionally, Ms. King is admitted to practice before the Sixth Circuit Court of Appeals and before the United States District Court for the Western District of Tennessee. Her memberships include the American Bar Association, the Memphis Bar Association, the Tennessee Bar Association, as well as the Association for Women Attorneys.