Q. How is this legal I don’t understand, "he does not qualify to be a dependent of my exes"?
A. There is a provision, in the tax code, that allows the custodial parent to let the non custodial claim the dependency. It appears that the judge has ordered you to let the father claim the child, on his taxes (or effectively ordered it by telling you not to claim the child).
This is a very common situation in divorce degrees. Ideally, a divorce decree would require the custodial parent to provide IRS form 8332 to the non custodial parent. But, from a practical matter, that may not be needed.
Note: I'm not a lawyer. But, from what you describe, you did not follow a court order and the judge has ordered a remedy. You got the benefits of claiming the child, on your taxes, and now the judge has ordered you to hand over some, or all, of that to the the other parent. In simplest terms, if the child was under 17, the dependency was worth up to $2000 to him. If over 16, only (up to) $500.
The father's accountant should know this:
There is a special rule in the case of divorced & separated (including never married) parents. When the non-custodial parent is claiming the child as a dependent/exemption/child tax credit; the custodial parent is still allowed to claim the same child for Earned Income Credit, Head of Household filing status, and day care credit. This "splitting of the child" is not available to parents who lived together at any time during the last 6 months of the year; then only one of you can claim the child for any tax reasons. The tax benefits may not be split in any other manner.
Note in particular that the non-custodial parent can never claim the Earned Income Credit, Head of Household filing status or the day care credit, based on that child, even when the custodial parent (or a judge) has released the dependency to him.
