Claiming Dependent - Divorce decree states 'every year as allowed by law' - need clarification

[SpartanGA]

Hello, need guidance.

Divorced, living separate for many years.  This year my son, turned 18 in Feb of last year, graduated from high school and moved 100% to my residence in mid June (out of his mothers whom has claimed him since divorce in 2015).  Therefore, he lived with me the majority of the year and I supported him the majority of the time.  The custody plan/agreement expired in May at his HS graduation.

Our divorce decree states that his mother can claim him 'every year as allowed by law'.  My lawyer told me to talk to CPA. 

Am I to believe the law in this case, is the IRS guidelines on dependents?  Given my description of the living and support situation above, do I enforce that I claim him?

Thanks and let me know if more details are necessary.

[Rainman12]

Based on circumstances you described, you alone would claim son for 2019. IRS only considers which parent he spent the most nights with during the tax year. He would be a full-time student for 2019 (must be in FT status for at least some part of five months).

[SpartanGA]

Thanks.  So you agree when my decree states 'every year as allowed by law' means when she is eligible to claim him based on IRS rules/law.

Of which, she is not eligible for 2019 based on what I described above.  and yes he is full time student.

[Rainman12]

Yes, I agree as stated. 

[Hal_Al]

Q.  So you agree when my decree states 'every year as allowed by law' means when she is NOT eligible to claim him based on IRS rules/law? (I assumed you meant not eligible).

A. No. I'm surprised you lawyer told you to see a CPA.  It's a legal question, not a tax question.  The tax law still allows her to claim him. What's changed for 2019 is that she now needs form 8332, from you, the new custodial parent. The IRS goes by physical custody, not legal custody*.  "The custody plan/agreement expired in May at his HS graduation" is irrelevant

One other thing as changed: if she will be claiming him, she can no longer "claim everything", since she is not the custodial parent. 

 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 has released the exemption to him.

* But, be advised that the issue of emancipation enters the picture when the child reaches emancipation age for his state. An emancipated person is not longer in anybody's "custody" and the ability to split the child is technically lost. In this case she would not  "allowed by law". But, the father can continue to claim the child as a qualifying child, for tax purposes, because the child still resided with him (for more than half the year). 

[SpartanGA]

Why does the tax law still allow her to claim him?  He lived with her for about 4 months total days in 2019 and 8 months with me.  The decree states 'she can claim him as law allows'.  I feel due to the physical custody and my financial support, this allows me to claim him 100%.

I dont understand your argument that she has any claim for claiming him.

[Hal_Al]

Q. Why does the tax law still allow her to claim him? 

A.  The tax law allows either the custodial or non-custodial parent to claim the child (the rules for divorced and separated parents). Period.

Since the law allows either, your real question is how to determine who will claim him.  There are usually two ways to to that: 1. The two parents agree on how or 2. A judge orders how.  Lacking any such agreement, you are correct; the parent the child lives with gets 1st choice.

So, the question is what does 'every year as allowed by law' mean? Until he no longer qualifies as a dependent or did The right to claim the dependent expire with the custody plan/agreement. That's why it's a legal question, not a tax question. My non-lawyer opinion is that it's until he no longer qualifies as a dependent.

 "I feel due to the physical custody and my financial support, this allows me to claim him 100%." Financial support is meaningless. The IRS will allow you to claim him based on custody alone. The IRS doesn't care about the court order, unless it is dated before 2009. The IRS goes by it's own rules and will award the dependency to the custodial parent, if both parents try to claim the child. Her only remedy  is to take you back to court for sanctions.

Since the custody changed near mid year, she may try to claim she was still custodial parent. 

If someone else claimed your child inappropriately, 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.

Winner gets the tax benefits; loser gets to pay the IRS back with penalties and interest.  The custodial parent almost always wins. 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.  

Since she had custody for all the previous years, the burden of proof will, most likely be on you to prove you now have custody.

[SpartanGA]

Thanks

This is exactly how I see it.  He moved in with me 100% in Mid June and in addition he was with me for 30% of the prior 2019 days.  Thus I had custody for much greater than 50%, the IRS bar.

Of course, the issue is to tell my ex this information and have her agree.

[Carl]

Actually, what you're decree may say holds no weight with the IRS. The IRS has their own rules when it comes to dependents of divorced or separated parents. The only entity that can over ride those rules are a federal judge. Since federal judges don't deal with this issue, I'm 100% confident in stating such an over ride will never happen. Not ever.

As it stands for you in 2019, you have every legal right to claim your son as your dependent (based on the information you have provided) and this has absolutely nothing to do with any decree. If your ex claims him, let them. When the IRS sees that both of you have claimed him, you will both be audited (paper audit by mail only). The winner keeps the money, and the loser pays it back with interest, penalties and fines.

[Carl]

So you agree when my decree states 'every year as allowed by law' means when she is eligible to claim him based on IRS rules/law.

You keep bringing the divorce decree into this. It flat out doesn't matter what the decree says when it comes to your federal taxes. Even if it didn't say "as allowed by law". It just does not figure into this at all. You can incinerate that decree if you want, and based on the information provided, you can still claim the dependent on your federal tax return, as you have every legal right to do so.

[Hal_Al]

"As it stands for you in 2019, you have every legal right to claim your son as your dependent."

No, you do not have EVERY legal right. You just have the right under the IRS rules. This assumes the divorce degree is dated after 2008. So, the IRS will let you claim him.  But if the divorce decree is still valid (it's not clear that it is), your ex can take you back to family court. The judge has no authority over the IRS. But he does have authority over you. He can order you to pay her, fine you and/or throw you in jail for contempt of court, for not complying with the order.

[#12 · Accepted solution]

"As it stands for you in 2019, you have every legal right to claim your son as your dependent."

No, you do not have EVERY legal right. You just have the right under the IRS rules. This assumes the divorce degree is dated after 2008. So, the IRS will let you claim him.  But if the divorce decree is still valid (it's not clear that it is), your ex can take you back to family court. The judge has no authority over the IRS. But he does have authority over you. He can order you to pay her, fine you and/or throw you in jail for contempt of court, for not complying with the order.