By Jennifer M. Paine
According to the IRS, this means the parent who has the child more than one-half of the year.
This means, if your divorce decree is silent, you are out of luck if you are not the custodial parent, an equal parent paying child support, or an equal parent not paying child support but with the higher adjusted gross income.
However, parents can agree how to alternate the exemptions. If you are not already divorced, this is worth negotiating, particularly if you need the exemption to avoid paying-in this tax season.
Your agreement must state who is claiming the child when, that neither parent will retract that agreement absent both parents’ consent, and that both parents will timely execute IRS Form 8332, which releases the exemption. Attach the agreement and Form 8332 to your return.
Be mindful, however, that sometimes it makes sense for the parent with the lower annual income to claim the child. This is particularly true for financial aid season because a child generally qualifies for more financial aid if the child is the dependent of the lower income-earning parent.
So, be creative, and have your CPA run the numbers both ways each year to determine what is financially beneficial, for you, your ex, and your families. You can even provide for such in your divorce settlement agreement or divorce decree.
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Note: This information is general in nature and should not be construed as tax advice. You should work with your attorney or tax professional to determine the tax advantages that will work best for your situation.
Jennifer M. Paine is a Michigan Divorce Lawyer with Cordell & Cordell. She is licensed to practice in Michigan, and has been admitted pro hac vice in Illinois, Ohio, and the United States Court of Federal Claims.
Ms. Paine received her BA in English and Mathematics from Albion College and graduated Summa Cum Laude. She received her Juris Doctorate from MSU College of Law and graduated Summa Cum Laude.