I'm going to drop out here because I don't have the time to invest further in this. The verbal explanation you got directly conflicts with the written instructions (and those written instructions aren't just someone's interpretation that was dumbed-down for the publications. It's the exact language in the Treasury Regulations.
It's interesting that the Tax Code does not discuss emancipation.
https://www.law.cornell.edu/uscode/text/26/152
The regulations, which are written to implement the law, and which must go through an extensive comment and revision process before being adopted, are where the details are found.
https://www.law.cornell.edu/cfr/text/26/1.152-4
Again, it clearly says, "A child is treated as residing with neither parent if the child is emancipated under state law." This is section 1.152(4)(d)(1).
What it does not say clearly, is one of these two following statements:
- "In the case of emancipated children, the special rules in §1.152-4 no longer apply, but the general rules in §1.152-1, §1.152-2 and §1.152-3, including residency, apply normally."
- or
- "In the case of emancipated children, the child is treated as residing with neither parent for all purposes under §1.152 et seq."
Your operator at the IRS took the view that the normal rules apply when the child is emancipated. But the plain language says "treated as living with neither parent" and does not include a qualifier as to whether that only applies to the special rules or to all rules.
Usually, if the regulation is unclear, then someone will eventually challenge them in court, and judge needs to look first at the plain language of the regulation, and if it is not clear, then they look back to the section of the law that authorizes the regulation to make sure the regulation matches the law. That's what I want to see in this kind of situation and that I don't have the time to look for.
If your ex-wife also claims your child as a dependent, both of you will get investigated, and the first key point is whether the examiner on the case has the same view as the operator you spoke to. If there is an internal audit manual, that explains such cases are judged, it could very well be that both the operator and the examiner in your case will be reading from the same page and come to the same conclusion. But again, for me to agree without reservation, I would want to see that page. It's also possible that the examiner will look at the situation differently, and you won't be able to use your verbal phone call as a defense, because that's just how the IRS operates. (You could use the phone call as a defense against a penalty, on the grounds that you acted in good faith, but you would not be able to use the call as a defense against a tax assessment, because if the examiner finds against you, that's final. You can appeal to tax court, but not the phone operator.
All of which is to take a very long-winded way of saying that, while you can certainly rely on the operator's information if you like, I still view the situation in my own mind as unclear, because the plain language of the regulation disagrees with the common-sense interpretation, unless we add words that are not there. And I would really like to see the audit manual or a court case, to know how this language discrepancy is actually handled.
