Divorce and Dependents

[lcmcap]

My ex tried to claim my college age child the year he started college.  I pay for all of his college and claimed him on my taxes that year, along with my other child. The IRS corrected his return. Do I have to amend if we had an order requiring that we alternate dependents? He says I have to. I’ve always been the custodial parent. 

[Bsch4477]

You raise many issues. 

1.  If the child lives with you (custodial parent) only you can claim the dependency. If you wish to have him claim the dependency (presumably due to a divorce agreement) you do that through the 8332 as you have been. 

2.  Even if he claims the dependency he cannot, as the non custodial parent, file as Head of Household unless he has a separate qualifying child living with him. You retain that privilege along with the earned income credit and child care credit if otherwise qualified. 

3.  The IRS has its own rules and doesn’t care what your divorce agreement says. 

4.  Child support is irrelevant. 

5.  I don’t understand why the court was involved unless he felt that you breached your agreement and did not allow him the dependency under your divorce agreement. 

[lcmcap]

He felt he was entitled because of the order from 2013. He’s not a nice person and I’ll leave it at that. The judge agreed it wasn’t fair to me but sided with him to uphold the order because that was the final year that he paid any child support. Clearly the IRS agreed with me because they adjusted his and I never received anything from them regarding my return.  If I amend will the irs change it back to my original return if I present the order and stand on the original one?

[Bsch4477]

The IRS will adjust your return based on your amendment. 

[AmeliesUncle]

You didn't state the exact age of your child or what state you are in, but ...

In most states, a child is "emancipated" at age 18.  But that can vary by state, so you need to check the age in your state.

If the child was "emancipated" for over 6 months during the year, the non-custodial parent can NOT claim the child as a dependent.  Court orders can not change that.  If the non-custodial parent were to claim that child as a dependent, that would be tax fraud.

[lcmcap]

He turned 19 in October of that year. I live in Va. 

[Opus 17]

@lcmcap 

From the day your child turned 18, the court order regarding dependent arrangements on your federal tax return is no longer enforceable.  from that point, the child is not considered to live with either parent, and neither parent can claim the child as a “qualifying child“ dependent, because that status requires residency.

The other kind of dependent is “qualifying relative.“ For a parent to claim the child as a qualifying relative dependent, the parent must pay more than half the child’s total living expenses and the child cannot have more than $4300 of their own taxable income.  It doesn’t matter what the court order says, and it doesn’t matter where the child actually lives. It only matters who pays more than half of the child expenses.

If the child earned more than $4300 in the year that we are talking about, the neither you nor the other parent can claim the child as a dependent. You could file an amended tax return, or wait and see if the IRS catches up to you. The IRS has three years to correct your return from the date you filed it.  The child would also be eligible to amend their tax return to uncheck the box that says “I can be claimed as a dependent by someone else.” This may qualify them for additional credits, but we can’t know without a lot more information.  If the child earned less than $4300 that year, then you have to do a calculation to see who paid the most support. Support includes tuition, room and board, travel, medical expenses, clothing, and entertainment. Support that the child paid for them self includes their own earnings they spent on their own living expenses plus student loans taken out in their own name, because they must be repaid.  Whichever parent paid more than half can claim the child as a dependent, and that might even be your ex. If no one paid more than half, for example if your ex paid 40% and you paid 40% and the child paid 20% of their own expenses, then no one claims the child as a dependent.

[lcmcap]

I paid and still pay more. He lives with me and is a full time college student under 24. 

[AmeliesUncle]

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@Opus 17 wrote:

from that point, the child is not considered to live with either parent, and neither parent can claim the child as a “qualifying child“ dependent, because that status requires residency.

The child certain can be a "Qualifying Child".  It is only for purposes of the ability for of the non-custodial parent to claim the child that the child is considered as not being in custody of the parents.

[Opus 17]

@AmeliesUncle 

I disagree.  I analyzed this extensively with (I believe) @Hal_Al  several months ago.  The wording of the statute and publication 501, and some of the specific examples in pubs 501 and 504, only support the notion that the child lived with neither parent once they turn 18.  It doesn’t say, the order does not apply and the child lived wherever they lived, it says the child lived with “neither parent”.  If the child lived with neither parent than qualifying child is off the table completely once a child of divorced or separated parents turns 18 or is emancipated.  

[AmeliesUncle]

The emancipation statement is specifically for the rule to pass the exemption to the non-custodial parent, not a general rule for dependency.  A parent doesn't lose the "Qualifying Child" just because they got a divorce.

For example, Publication 501 (emphasis mine):

Example 5—child emancipated in May.

When your son turned age 18 in May 2020, he became emancipated under the law of the state where he lives. As a result, he isn't considered in the custody of his parents for more than half of the year. The special rule for children of divorced or separated parents doesn't apply.

[Opus 17]

@AmeliesUncle 

You underlined the wrong part of the example.  

As a result, he isn't considered in the custody of his parents for more than half of the year

That’s automatic disqualification for qualifying child.  If the IRS wanted to say “the special rules don’t apply and the child is treated as living with the parent they lived with” it would have said that instead.  

Also, pay close attention to example 6.  The child lives with the mother for five months and the father for 7 months, but is emancipated after living with the father for two months.  Because the child lived with the mother more than half the time before it was emancipated, and does not live with either parent after being emancipated, the mother can claim the child in example 6.  

Example 6 only makes sense if the child lives with neither parent after being emancipated.  Using your understanding of the situation, the father would claim the child in example 6.

Publication 501 very clearly says the child is not considered to be in the custody of their parents after being emancipated. It doesn’t say, backstop to a different definition of custody, it says not in custody.

And yes, this does mean that the parent loses “qualifying child“ after the child is emancipated, if the parents are divorced or separated. It might not sound fair, and it might even not have been intentional, but that’s the way the law was written.   (It also means that a child of divorced or separated parents can receive substantial tax benefits once they turn 18, that a child of an intact family might not receive.  Somebody loses and somebody else wins.)

[AmeliesUncle]

Again, that is FOR PURPOSES OF THE SPECIAL RULE.  The entire concept of "custody" is for this rule.

Example 5 from the Publication is taken from Regulation §1.152-4(g) Example #6:

F and G are the divorced parents of Child. In May of 2009, Child turns age 18 and is emancipated under the law of the state where Child resides. Therefore, in 2009 and later years, F and G do not have the right under state law to physical custody of Child for over one-half of the calendar year, and Child is not in the custody of F and G for over one-half of the calendar year. Section 152(e) and this section do not apply, and whether Child is the qualifying child or qualifying relative of F or G is determined under section 152(c) or (d).

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@Opus 17 wrote:

the mother can claim the child in example 6.  

Example 6 only makes sense if the child lives with neither parent after being emancipated.  Using your understanding of the situation, the father would claim the child in example 6.

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No, the father CAN claim the child.  The mother can't. 

[Edit:  The publication and Reg don't say "mother" and "father", so perhaps I misunderstood what you said, but based on the context, I *THINK* we are both applying "mother" as the first parent and "father" as the second parent).

Example #6 from the Publication is from Example #7 in the Regulation (although there are some oddities with this example):

Example 7.

(i) The facts are the same as in Example 6, except that Child turns age 18 and is emancipated under state law on August 1, 2009, resides with F from January 1, 2009, through May 31, 2009, and resides with G from June 1, 2009, through December 31, 2009. F executes a Form 8332 releasing F's right to claim Child as a dependent for 2009, which G attaches to G's 2009 return.

(ii) Under paragraph (c) of this section, Child is in the custody of F and G for over one-half of the calendar year.

(iii) Under paragraph (d)(1) of this section, Child is treated as not residing with either parent after Child's emancipation. Therefore, Child resides with F for 151 nights and with G for 61 nights. Because the requirements of paragraphs (b)(2) and (3) of this section are met, section 152(e) and this section apply, and G may claim Child as a dependent.

https://www.law.cornell.edu/cfr/text/26/1.152-4

[Mike9241]

He felt he was entitled because of the order from 2013.  are you saying the courts granted him the right to claim the kids.   if so, you were supposed to provide him with form 8332. the local courts have no control over the tax laws. under the tax laws with the 8332 he could claim the dependency deduction through 2017 (it ended in 2018)  and the child tax credit. under the tax laws, he could not claim any of the following because he's not the custodial parent. 

under the tax laws you would be entitled to the child and dependent care credit, earned income credit, head of household filing status (see note), income exclusion of employe-provided dependent care assistance    

note: for you to claim head of household you had to pay more than half the costs of keeping up the home lived in for more than 6 months by your qualifying child.  if you did not pay more than 1/2 the costs you would need to file as single. (your ex is subject to the same rule so since the child apparently didn't live with him, he can't file as HOH)

so exactly what did the judge order you to change and what year(s)?

[Opus 17]

@AmeliesUncle 

The difference between example 6 in pub 501 and example 7 in the regulation is that in example 6, there is no form 8332 and the custodial parent claims the child.  In the regulation example 7, the custodial parent executes a form 8332 and, because the child was in custody of "the parents" for 7 months, the special rules apply and the form 8332 is valid.

More generally, I think you are probably correct after all.  I found the discussion from earlier this year, where it turns out I wisely dropped out because I couldn't find a definitive statement one way or the other.  The last sentence of example 6 from the regulations seems to be definitive, although I don't know why it is only in the example and not more explicitly in the main body of the regulation.