No Dependency Exemption for Unsigned Pre-2004 Divorce Decree

No Dependency Exemption for Unsigned Pre-2004 Divorce Decree

Father’s tax exemption for dependent children rejected

Porter v. Comm’r, T.C. Memo. 2015-141

The taxpayer, a father of three children, moved to Virginia after being divorced in Florida in 2002.  The children stayed in Florida with their mother, under the terms of a mediated divorce settlement.  For tax purposes, the eldest and youngest were assigned as Mother’s dependent children, and the middle child was assigned to Father.

Eight years later, Mother filed a federal income tax return claiming all three as dependentchildren, in violation of the divorce settlement. When Father subsequently tried to file an electronic return, his return was rejected.  Father claimed one child as a dependent, head of household filing status, and a child tax credit.  Father filed a paper return instead, but did not attach an IRS Form 8832.  The divorce settlement order was signed by a judge, not the parties themselves, and Father was unable to locate the mediation memorandum that was signed by both parties.

Tax exemptions for dependent children, which are authorized by IRC §151, are legally allocated to the parent who has a majority of the parenting time under IRC § 152.  An exception exists where two conditions are met, as provided by IRC § 152(e)(2).  First, the custodial parent must sign a written declaration that he or she does not intend to claim the child’s exemption.  Secondly, the declaration must be attached to the return of the taxpayer who claims the exemption.

The written declaration by the custodial parent must be made on IRS Form 8332 or a substantially similar form.  A court order or decree issued before July 3, 2004 can serve in place of a Form 8332, under relevant case law.  In this case, however, the 2002 divorce decree was insufficient because it was not signed by the custodial parent.  Had the Father been able to procure the mediation memo signed by Mother, and attached it to his return, he might have been able to prevail.

The taxpayer’s head of household filing status and child tax credit were also rejected. To be entitled to head of household filing status, a taxpayer must maintain a home that “constitutes for more than one-half of such taxable year the principal place of abode” of at least one qualifying child. Sec. 2(b). Petitioner stipulated that all three children resided with their mother for more than half of the calendar year 2010. Thus, he would not be entitled to head of household filing status even if he had proven his entitlement to a dependency exemption deduction. To be entitled to the child tax credit, a taxpayer must have a “qualifying child * * * for which the taxpayer is allowed a deduction under section 151.” See sec. 24(a).