During a divorce one of the items to consider when negotiating an all-inclusive settlement is which parent will claim the child or children as a tax exemption. The general rule to claim a dependency exemption is that the parent must provide more than half of the child’s support for that year and the child must be either less than 19 years of age or a full-time student under the age of 24. 26 U.S.C.S. §152(c)(1)(B), 152(c)(3), 152(a). This general rule is overridden by a blanket exception in favor of the parent who has custody of the child. In the typical situation where the wife gets custody of the child, barring a written agreement or other written direction to the contrary, regardless of the financial implication, the wife is the one who gets the tax exemption. 26 U.S.C.S. §152(c)(1)(A). The custodial parent rule is also effective, even in the absence of a written instrument, when the parents have been living apart at all times during the last six months of the calendar year. 26 U.S.C.S. §152(e)(1)(A)(iii). Under 26 USC § 152(e)(1), custodial parents are generally given the right to claim a child subject but can waive that right in favor of the non-custodial parent. Id.
Ultimately the IRS is responsible for making a determination regarding which parent is entitled to the dependency exemption. However, statutory authority supports finding a state court may have the authority to designate the parent entitled to the exemption and has the power to require the parent not entitled to the exemption to sign the release of claim declaration. Gwodz v. Gwodz, 234 N.J. Super. 56 (App. Div. 1989). When making a determination the trial judge must state which parent shall enjoy the exemption and make findings with respect to the extent of the support provided to the child. Deciding which parent should claim the dependency deduction, you or your spouse, depends on your personal circumstances. Contact our offices today to schedule an appointment to discuss the particulars of your case.