Such a release is treated as applying to the first tax year after the tax year of execution and all subsequent tax years. ![]() 1.152-4(e)(1) provides that the written declaration for the custodial parent to release the exemption can specify all future years. ![]() Lesson learned: Avoid divorce agreement provisions that cannot be enforced (such as requiring one spouse to sign a Form 8332 every year). The court added that it sympathized with H but that it must follow the law as written. divorce documents therefore may not qualify as a written declaration because they were executed after July 2, 2008, and, consequently, failed to satisfy the written declaration requirement of section 152." The IRS denied these tax preferences, and the court agreed.Īccording to the court: "Unfortunately for, the regulations explicitly state that court orders, decrees, and separation agreements executed in a tax year beginning after July 2, 2008, do not satisfy the written declaration requirement. H attached a letter to the return explaining the situation and attached the relevant pages of the divorce agreement. H claimed the children anyway (dependency exemption and child tax credit). ![]() Although H was current with child support, W refused to sign Form 8332. 15, to release the dependency exemption for their two children. They executed a Permanent Parenting Plan with a provision under which, if the husband ( H) was current with child support payments, the wife ( W), who had custody, would provide a signed Form 8322, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, by Feb. There are lessons to be learned from these cases for parents, tax practitioners, and divorce attorneys, and they are noted here. This article summarizes these cases for 2016 (through September). The first exception typically generates a few Tax Court decisions annually. The second exception is likely "deadwood" today as any children mentioned in an instrument executed before 1985 are too old today to be minors. The two exceptions are (1) the custodial parent releases his/her claim to the dependency exemption and (2) qualified pre-1985 instruments. ![]() This special rule constitutes 20% of the words of Sec. The simple rule becomes complicated as Congress provides exceptions for divorced parents. The law can become complicated for parents not filing a joint return because they are divorced, due to the existence of Sec. If both parents meet this rule, the parent with the highest adjusted gross income claims the child as a dependent (assuming all other requirements, such as age, are satisfied) (Sec. Basically, where parents of a child do not file a joint return, the child is the "qualifying child" of the "parent with whom the child resided for the longest period of time during" the tax year. 152 includes what seems like a simple rule. When parents divorce without a meeting of the minds or a well-crafted agreement, issues can result as to who is entitled to the tax benefits from supporting their children.
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