Electronic Filing Can Botch Dependency Exemption for Non-Custodial Parent

Electronic Filing Can Botch Dependency Exemption for Non-Custodial Parent

A parent who pays child support might want the tax benefit of the dependency exemption for the non-custodial parent, but electronic filing can botch it, if it’s not done right.  IRS Form 8332 is a “must” to secure the dependency exemption for the non-custodial parent. In many cases, the parents agree, or a court decides, to assign the child’s dependency exemption to a parent who can maximize the tax benefit.

But a court order or written agreement are not good enough, in the eyes of the IRS and the Tax Court.  The parent who has custody more than 50% of the time must sign Form 8332. And still, the electronic filing of a parent’s tax return can complicate the problem.

A parent who wants to claim a child’s dependency exemption must meet the legal requirements under Tax Code § 152:

  1. The child must be related to the parent as a natural, adopted or step child or descendant;
  2. The child must reside with the parent (or one of them) for more than one-half of the year;
  3. The child must be under age 19 on December 31, or under age 24 if the child is enrolled in college; and
  4. The parents, or one of them, must contribute at least 50% of the child’s financial support.
  5. Under §152, a parent who has more than 50% of the parenting time is automatically entitled to claim the child’s dependency exemption, unless it is assigned to the other parent.  When allocating the dependency exemption for the non-custodial parent, the parent who has custody must sign IRS Form 8332.  Form 8332 must be stapled to the tax return of the parent who is claiming the child’s dependency exemption.  If the form is not signed and stapled to the tax return, the tax deduction can be disqualified.  There are plenty of examples of this in U.S. Tax Court, which are discussed in Chapter 5 of my book.

Can Electronic Filing Botch the Dependency Exemption for the Non-Custodial Parent?

These days, many parents file their tax returns electronically.  If a parent files electronically, how can the parent staple the IRS Form 8332 to the tax return?  Here’s the answer, found in the instructions to Form 8332:

Note. If you are filing your return electronically, you must file Form 8332 with Form 8453, U.S. Individual Income Tax Transmittal for an IRS e-file Return.

That’s right; a parent who is claiming a child’s dependency exemption that was assigned under IRS Form 8332, must staple the signed Form 8332 to Form 8453 and mail it to the IRS.  If these forms are mailed to the IRS, a parent who files electronically can claim the dependency exemption for the non-custodial parent. For more than 25 years, my law firm has been representing parents in routine and complex child support cases.  For legal representation in Western Pennsylvania, call Brian Vertz at 412-471-9000.