Can I claim dependent if he's behind on court ordered support

[Laura-may]

Never married but we have a legal agreement that says every other year he can claim her as a dependent.  In 2019, I filed a case to increase support for the first time and August 2020 the judge ruled to increase the monthly amount of support and no less than $54 each month be paid to make up arrears. Side note: the case was this long due to his positive drug test. He filed a motion immediately to have the amount decreased to a different amount and no arrears. That motion was overruled, and yes he has filed yet another motion saying the judge was wrong. The hearing isn't until the end of April, he's only paid what he feels he should pay, never once paying the ordered amount. Do I need to do anything/file anything or can I claim her on my 2020 taxes since he's behind? 

[Opus 17]

First, I will explain the rules because many people seem not to know them, including some lawyers and judges. At the very bottom, I will directly answer your question.

The IRS doesn’t care about and is not influenced by court orders, currency on child support, drug tests, or any of the other back-and-forth issues in your state court. They simply don’t care.  Under IRS rules and federal tax law, the only parent who has the absolute right to claim a child as a dependent is the parent where the child lives more than half the nights of the year. This is the “custodial parent“ in IRS language and has nothing to do with any custody order. There is no such thing as 50-50 custody because in most years, there are an odd number of nights and one parent must have custody more nights than the other parent.

If you are the parent with custody more than half the nights of the year you have the absolute right to claim your child as a dependent. If you decide to release the dependent claim to the other parent, you must give the other parent a signed form 8332 dependent release.  In TurboTax, you would indicate that the child lived with you more than half the year but that you are releasing the dependent with a signed form 8332. TurboTax will still allow the child to qualify you for head of household, EIC, or the dependent care credit, because these tax benefits always stay with the parent who has custody more than half the year and can never be waived, transferred, or shared. The other parent would indicate in their tax program that they had custody less than half the year and they are claiming the child because they received a form 8332.  The other parent will qualify for the $2000 child tax credit but no other dependent benefits. The other parent will be required to mail the original signed form 8332 to the IRS within three days after e-filing the rest of their tax return.

If you have not previously been using form 8332 and filing in this way, then you may have been denying yourself certain tax benefits and you may have been allowing the other parent to claim certain tax benefits they were not entitled to.

Going back to IRS regulations, as I said, the IRS does not care whether or not you sign form 8332. It is your right to claim the child if the child lives in your home more than half the year. However, the state court can enforce its order and force you to sign form 8332, or find you in contempt, or modify the custody order in such a way as to punish you, if the court has ordered you to sign the form and you refuse. You should not refuse to follow a court order without competent advice from your family law attorney.

[Hal_Al]

Q. Can I claim dependent if he's behind on court ordered support?

A. Yes and No.

As far as the IRS is concerned, yes.  If you both try to claim the child, the IRS will honor your return, not his*.

The IRS doesn't honor court orders. The custodial parent has first priority on claiming the children on her taxes; regardless of the amount of support provided by the non-custodial parent. The IRS goes by physical custody, not legal custody. The non-custodial parent can only claim the child as a dependent if the custodial parent gives permission (on form 8332) or if it's spelled out in a pre 2009 divorce decree. Even if a court order, dated after 2008, gives the non-custodial parent the right to claim the child, he must still get form 8332 from the custodial parent. A properly worded decree should require her to provide that form. https://www.irs.gov/pub/irs-pdf/f8332.pdf

His only remedy is to take you back to court for violating the court order.  How the judge will feel about your not obeying the order, under the circumstances (he didn't obey it either) is a legal question not a tax question.

*If someone else claimed your child, and if they file first, your return will be rejected if e-filed. You would then need to file a return on paper, claiming the child as  appropriate. The IRS will process your return and send you your refund, in the normal time. Shortly (up to a year) thereafter, you'll receive a letter from the IRS, stating that your child was claimed on another return. It will tell you that if you made a mistake to file an amended return and if you didn't make a mistake to do nothing. The other party will get the same letter you did. If one of you doesn't file an amended return, unclaiming the child, the next letter, from the IRS, will require you to provide proof. Be sure to reply in a timely manner.

[Hal_Al]

Opus 17 already said this, but I want to emphasize it: Even if you let the ex claim the child, you still get to Claim EIC, dependent care credit and Head of Household (if you otherwise qualify) based on that child.

If you decide to go that way,  it's good idea to let the other parent know that you will be claiming those items, as many first time separated parents are not aware of this rule and may try to claim those items, which will cause the IRS to send out letters.