This happens a few times a year, every year. Someone has gotten a divorce, and there’s a dispute over who can claim the kids on the tax returns.
Here’s one example of what can happen.
John is divorced. His ex-wife Annie is the custodial parent of their child, thus making John the non-custodial parent. John is filing his 2017 tax return. The divorce decree says John can claim the child in odd-numbered years. John’s problem is, Annie has decided she won’t sign the Form 8332 to release her claim to the child. Is there anything John can do?
Unfortunately for John, there’s nothing he can do with the IRS to claim the child. His only option is to seek legal recourse against Annie. Let’s look at why.
The IRS Doesn’t Care About Your Divorce Decree
This is what’s mind-blowing for most people: you get a divorce decree, and it may well say “John can claim the child in odd-numbered years.” I’ve even seen divorce decrees that say things such as “so-and-so spouse can file as head of household.”
Guess what: the IRS doesn’t care about what your divorce decree says. The IRS cares about who is the custodial parent.
The custodial parent is the parent with whom the child spends the majority of nights during the year. In a 365-day year, that means 183 nights. That parent is the custodial parent. Tax law says ONLY the custodial parent can claim the child and all associated tax benefits.
Now, the custodial parent can waive his or her claim to the child by signing a Form 8332 and giving it to the non-custodial parent. The form only waives the dependency exemption* and the child tax credit — the custodial parent still gets all the other tax benefits associated with the child (daycare credit, EIC, etc.).
(*-NOTE: remember, the “tax reform” bill passed in December 2017 eliminates the dependency exemption starting in 2018.)
If the non-custodial parent can’t get their ex to sign a Form 8332, they are out of luck.
So, What Can “John” Do?
John’s only option in this case is to go to his attorney and have the attorney draft a letter to Annie, reminding her of terms of the divorce decree and compel her to sign the Form 8332.
“This blog post, along with comments that may follow, should not be considered tax advice. Before you make final tax or financial decisions, please secure a professional tax advisor to give you advice about your unique situation. To secure Jason as your accountant, please click on the ‘Services’ link at the top of the page.”