360° Coverage : Non-custodial Parent Should Not Claim Dependency Exemption...

10 Updates

Non-custodial Parent Should Not Claim Dependency Exemption Without Proper Form

Apr 13 2014, 11:56am CDT | by

If you are a non-custodial parent claiming one of your kids as a dependent, do you have Form 8332 (Release of Claim to Exemption) signed by the custodial parent and attached to your return?  If you...

Filed under: news

 
 
 

15 weeks ago

Non-custodial Parent Should Not Claim Dependency Exemption Without Proper Form

Apr 13 2014, 11:56am CDT | by

If you are a non-custodial parent claiming one of your kids as a dependent, do you have Form 8332 (Release of Claim to Exemption) signed by the custodial parent and attached to your return?  If you don’t, as far as the IRS is concerned, you don’t have a right to the exemption.  You might find this extremely frustrating because you have an order from a probate court signed by a judge that says you are entitled to the exemption.  Unless that order also has the custodial parent’s signature and social security number on it, it will not be any help.

The issue of non-custodial parents being denied exemptions that probate courts say they are entitled to has been litigated numerous times.  The money at stake does not seem to merit litigation.  I think this is one of those things where people really are fighting as a matter of principle.  My inclination would be to just let it go.  It’s not as if the IRS is charged with validating you as a parent.  They’ve got enough problem’s with exempt organizations without getting into that.  At any rate, it is not a fight you will be winning in Tax Court, as was recently confirmed by the Eighth Circuit which consolidate the appeals of Bill and Phoebe Armstrong and David and Melinda Hanson.

Here is the lawyerly version of the Court’s conclusion.

Billy and Phoebe Armstrong and David and Melinda Hanson appeal Tax Court decisions disallowing their claims of dependency exemption deductions and child tax credits for a child of each husband’s prior marriage. For each couple, only one tax year is at issue, a year in which the ex-wife, the custodial parent, failed to sign a document stating that she “will not claim such child as a dependent” that year, even though she had agreed to provide that document if her ex-husband paid all required child support. We consolidated the appeals. Reviewing the Tax Court’s interpretation of the governing statutede novo , we conclude that its decisions are consistent with the plain language of 26 U.S.C. § 152(e)(2) and therefore affirm.

But, but, but …. It’s Just Not Fair

Here are a couple of the arguments that, according to the Tax Court and with the blessing of the Eighth Circuit, do not work.

She Promised To Sign If I Kept Current With Child Support Which I Did

By enacting the 1984 amendment “to simplify the process,” the Armstrongs assert, “Congress never wavered from its intent that the parent entitled to the deduction be the one who received it.” Here, both couples submitted documents in which ex-wives agreed that Mr. Armstrong and Mr. Hanson were entitled to the exemptions in any year they were current with their child support obligations, and it is undisputed they were current in the tax years in question. Therefore, the documents submitted in lieu of a Form 8332 signed by the custodial parents “conform[ed] to the substance” of Form 8332, and the taxpayers are entitled to the dependency exemption and child tax credit for C.E. and for Z.H.

A conditional declaration simply does not meet this requirement. As the Tax Court noted, when Mr. Armstrong’s ex-wife declared that she will not claim the exemption if he keeps current with support payments, she “thereby declared that if he does not keep current, then she will claim the child as a dependent.” Armstrong, 139 T.C. at 474. The documents submitted by the taxpayers merely told the IRS that the custodial parentsmight not claim the exemptions for C.E. and Z.H. in any particular tax year, not that they will not claim the exemptions.

The Probate Judge Said I Should Get The Deduction

The taxpayers further argue that state courts often allocate the federal dependency exemption during divorce proceedings, and principles of federalism require the IRS and the federal courts to respect those allocations. This contention is without merit. “The state law creates legal interests but the federal statute determines when and how they shall be taxed.” United States v. Mitchell, 403 U.S. 190, 197 (1971) (quotation omitted). Determining who is entitled to federal income tax exemptions, deductions, and credits is entirely a matter of federal law, for these are questions of “when and how they shall be taxed.”

It’s Not Fair

Finally, the Armstrongs argue that, even if they did not comply with the requirements of 152(e)(2), they did all that reasonably could be expected and therefore deserve equitable relief for their substantial compliance. We sympathize with noncustodial parents who are entitled to receive documents necessary to support their claims for federal dependency exemptions and child tax credits and their former spouses violate contractual or court-ordered obligations to provide those documents.

What Should You Do?

If the custodial parent is withholding a signed Form 8332 that you are entitled to, there are a couple of approaches.  Filing your return without the required form is not one that I would recommend. My own view which may be of limited applicability is to just forget about it and don’t claim the exemption.  This is clearly the best course, if both you and your ex are going to end up leaving money to the same kids.  If you are wrapped up in “the principle of the thing”, you should extend your tax return.  Call your lawyer and have them initiate whatever process is necessary to get the form signed and in your hands or have you made whole in some other way.  That exact process will, of course, vary from state to state and possibly from county to county within each state.  You might want to use a different lawyer than the one who originally handled the divorce, since that lawyer may not have adequately covered this base for you.

You can follow me on twitter @peterreillycpa.

Afternote

I have been stumbling a bit on the language in this piece.  The problem is that I keep thinking of divorced couples.  As far as I can recall all the case law in this area involves divorced couples.  The principles, however, apply regardless of whether the custodial and non-custodial parents were ever married.  I don’t know how common it is for there to be orders concerning allocation of tax exemptions going along with child support orders in non-divorce cases.

 
Update
10

7 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan Rakyat was to ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

7 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broken into by robbe ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

7 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by the Dewan Rakya ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

7 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, Datuk Seri Hishammuddin Huss ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Sela ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

8 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 million in compensation ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

8 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister Datu ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

8 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year inv ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

8 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

8 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara Damansara Skyway (K ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

WTO fails to reach trade facilitation agreement
Geneva, Aug 2 (IANS) Negotiations at the World Trade Organisation(WTO) has failed to agree on the implementation of the trade facilitation agreement as the deadline of July 31 passed.
 
 
Liberia reports new Ebola cases
Lagos, Aug 1 (IANS) The Liberian government has reported new Ebola cases as of July 28.
 
 
Japanese men's life expectancy over 80 years for first time
Tokyo, Aug 1 (IANS/EFE) The life expectancy of Japanese men stood at 80.21 years in 2013, the first time that men have gone past the 80-year mark in the Asian country, according to the country's ministry of health, labour and welfare.
 
 
Methane created mysterious Siberian crater: Study
London, Aug 1 (IANS) The mysterious crater spotted in the frozen Yamal peninsula in Siberia earlier this month was probably caused by methane released as permafrost thawed, Russian researchers say.
 
 
 

Latest from the Network

Commonwealth Games medals tally
Glasgow, Aug 2 (IANS) England lead the medals tally Friday at the 20th Commonwealth Games with 47 golds, 46 silvers and 43 bronzes followed by Australia and Canada. India are still fifth with a tally of 49 medals,...
Read more on Sport Balla
 
How John Legend coped with parents' divorce?
Los Angeles, Aug 2 (IANS) Singer John Legend credits his teachers for helping him cope with his parents' divorce and for motivating him to complete his Ivy League education. "I was 10 years old when my parents got...
Read more on Celebrity Balla
 
Kerry condemns violation of Gaza ceasefire
Washington, Aug 2 (IANS) US Friday condemned Friday the killing of Israeli soldiers and apparent abduction of another by the Palestinian militants that violated the ceasefire. "It was an outrageous violation of the...
Read more on Politics Balla
 
Gurusaidutt leads Indian shuttlers into semis
Glasgow, Aug 2 (IANS) Indian shuttler R.M.V. Gurusaidutt came out with a brilliant performance to oust Malaysian top seed Chong Wei Feng and enter the men's singles semi-finals of the Commonwealth Games here Friday....
Read more on Sport Balla
 
Discus thrower Seema earns silver, pugilist Pinki bronze (Roundup)
Glasgow, Aug 2 (IANS) Woman discus thrower Seema Punia grabbed a silver, boxer Pinki Jangra brought home a bronze, while pugilists and paddlers assured the nation of at least three more silver medals on day eight of...
Read more on Sport Balla
 
Four Indian boxers in final, Pinki takes bronze (Roundup)
Glasgow, Aug 2 (IANS) Four Indian boxers -- L. Sarita Devi, L. Devendro Singh, Mandeep Jangra and Vijender Singh -- made it into their respective gold medal bouts after Pinki Jangra lost her semi-final to settle for...
Read more on Sport Balla
 
Sharath-Amalraj settle for silver (Table Tennis Roundup)
Glasgow, Aug 2 (IANS) Veteran Achanta Sharath Kamal and Anthony Amalraj picked up the silver medal in the men's doubles table tennis after they lost 1-3 to Singapore's Hu Li and Ning Gao in the title clash of the 2014...
Read more on Sport Balla
 
Pallikal-Chinappa enter women's doubles squash finals (Roundup)
Glasgow, Aug 2 (IANS) India's star squash players Dipika Pallikal and Joshana Chinappa lived up to their names and potential to enter the women's doubles final at the Commonwealth Games here Friday. The Indian duo...
Read more on Sport Balla
 
Indian medal winners at the Commonwealth Games
Glasgow, Aug 2 (IANS) The following is the list of Indian medal winners at the 2014 Commonwealth Games here: Gold: Sanjita Khumukchan: women's 48 kg weightlifting Sukhen Dey: men's 56 kg weightlifting Abhinav Bindra:...
Read more on Sport Balla
 
Keith Urban reacts to ill-fated Massachusetts concert
Los Angeles, Aug 2 (IANS) Singer Keith Urban has broken his silence about his recent ill-fated concert in Massachusetts, where dozens of hospitalized fans and an arrest made for an alleged rape. "My team and I were...
Read more on Celebrity Balla