Dinesen Tax Greatest Hits: When a Temporary Absence is Not a Temporary Absence

Since it’s a holiday week, I’m reaching into the archives and re-running popular stories from days gone by.

This story is about a Tax Court ruling over dependency exemptions relating to separated couples.

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Originally published October 17, 2011

A man by the name of Mr. Alarcon lost a Tax Court case on Monday over whether he could claim the dependency exemptions for his two kids while he and his wife were separated and the kids lived with the wife.

Mr. and Mrs. Alarcon separated in late 2006.  They lived apart in 2007; she lived in the couple’s home while he went to live with his parents.  Mrs. Alarcon also had custody of the kids.  The divorce was finalized in 2010, at which time Mr. Alarcon was given possession of the house and moved back in.

The trouble started in 2007 when Mr. and Mrs. Alarcon claimed both kids as dependents on their separate tax returns.  This caused an IRS review, and the IRS denied the Mr. Alarcon’s claim because the kids lived with their mom more than half the year, thus making her the custodial parent and the person who is entitled to claim the kids.  Mr. Alarcon took the case to Tax Court.

Mr. Alarcon argued that his absence from the couple’s home was a temporary absence caused by the divorce proceedings.  He pulled out language from IRS publications that says temporary absences do not count as time spent away from a person’s kids, and thus he should be considered to have been living in the home with them.

While clever, the argument didn’t work.  ”Temporary absence” means, according to the publications, “if one or both of you are temporarily absent from your home due to special circumstances such as illness, education, business, vacation, or military service.”  Here’s more from the Tax Court ruling:

Petitioner, seeking justice from his perspective, construes the publications and the statutes they interpret as permitting him to claim his sons since he paid all costs for 2007 on the marital home, which he also considered to be his home. Congress and the Secretary, however, have laid down a bright-line test for simplicity and administrative convenience …. Because pursuant to the temporary order petitioner could not live at the marital home but his wife could and did in 2007, it was her and the sons’ residence, not his during that year. His prolonged absence, though not his fault and even if caused by his wife and her attorneys, does not make his more than 3 years’ absence temporary, nor does it make the marital home his residence for 2007. Consequently, neither (child) was petitioner’s qualifying child in 2007.

Mr. Alarcon could potentially have claimed the kids if he had gotten his ex-wife to sign a Form 8332, releasing her claim to the kids and letting him claim them.  But since that didn’t happen, he was out of luck.

Similar Dinesen Tax Times coverage:  Noncustodial Parent Loses Dependency Exemption

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