The only parent who is legally entitled to claim the child as a dependent is the parent where the child lived more than half the nights of the year. The IRS relies exclusively on residency and is not required to follow state court orders. In fact, federal law always preempt state law and state court orders.
If the custodial parent wants to allow the non-custodial parent to claim the dependent, the custodial parent must give the noncustodial parent a signed form 8332 dependent waiver. This allows the noncustodial parent to claim the child as a dependent. However, it does not allow the noncustodial parent to use the child to qualify for a head of household status or earned income credit, or the dependent care credit. These tax benefits always stay with the custodial parent and can never be waived, transferred, or released. When the noncustodial parent claims the child as a dependent using form 8332, they must mail it to the IRS after e-filing the rest of their return.
in TurboTax, the custodial parent will indicate that the child lived with them more than half the year by selecting seven months or longer for the residency question. The program will then ask, “are you releasing the dependent to the other parent?“ If the custodial parent answers yes, TurboTax will prepare a form 8332 release and tell the custodial parent to print and sign it. The program will award the parent earned income credit, head of household credit, and a dependent credit, if they are entitled, but will not claim the child tax credit or dependent exemption.
The noncustodial parent is supposed to answer the residency question by indicating the child live with them less than half the year, by choosing six months or less on the residency question. The program will then ask, “are you receiving a dependent release from the other parent?” When the noncustodial parent answer is yes, the program will award them the dependent exemption and child tax credit but will not aware than the other benefits. The program will also remind them to print out a cover sheet and to mail the cover sheet along with form 8332 from the custodial parent.
If a noncustodial parent claims the child without form 8332, and the custodial parent has not been using form 8332, then probably the noncustodial parent is claiming excess benefits and the custodial parent is failing to claim benefits that they may be entitled to, because they are not answering the residency questions correctly and not using the forms correctly.
If there is a court order in place that the noncustodial parent is to be allowed to claim the child as a dependent, the IRS will not enforce it. The IRS will only go by the child’s residency situation and whether or not a form 8332 is given. However, the noncustodial parent could go to state court and complain, and the state court could order the custodial parent to sign form 8332 or could issue other penalties to the custodial parent for refusing to sign. However, the court could never legally order the noncustodial parent to receive earned income credit, head of household status, or the dependent care credit, because those cannot be awarded to the non-custodial parent under federal law, and federal law always preempt state law and state courts.
In your specific situation, you have some misunderstandings.
First of all, if the father is non-custodial, the father would never sign form 8332. Form 8332 is signed by the custodial parent if they agree to release the dependent to the noncustodial parent.
Secondly, there is no legal requirement that a parent claiming their own child as a dependent provide 50% of the child support. The requirement is entirely based on residency. The parent in whose home the child sleeps more than half the nights of the year is the only person automatically entitled to claim the dependent, even if that parent does not pay more than 50% of the child support. (The rules are different if the dependent is not the taxpayer’s own child, or if the dependent is age 18 or older and not a full-time student, or 24 or older, but that does not seem to be the case here.)
For the 2019 tax year, the child’s mother, your current spouse, can do one of two things:
If required by the court, she would list the child on your tax return, indicate that the child lived with you more than half the year, indicate that she will give the other parent a form 8332. By listing the child in this manner, you would be entitled to the dependent care credit, or head of household status, or earned income credit, if you are otherwise qualified. Listing the child in this manner will also prevent the other parent from claiming these benefits if he attempts to do so. Your spouse would then give the noncustodial parent a signed copy of form 8332, which he would be required to mail to the IRS to support his claim to a dependent who does not live with him. She may need to file by mail anyway, depending on how the ex filed.
Or, if your spouse does not want to release the dependent to her ex on account of the situation, she can list the child on her tax return, and answer no to the question about releasing the dependent. She will need to file by mail, and the IRS will open an investigation. I would expect that the IRS would award the dependent to you, assuming that you can prove the child lived in your home more than half the year.
In that case, the other parent certainly could go to your local court and request an order of contempt or other penalties be placed against the child’s mother. Whether the court grants such a request is up to the court and will depend on how the court views the overall situation. You may want to get legal advice before you disregard the court order, even if the circumstances have changed.
