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Dependency Exemption & Child Tax Credit

Often in child custody proceedings, parents are concerned about who can claim the dependency exemption and child tax credit after the divorce is final. The dependency exemption and child tax credit can be very important to parents, as they are often relied upon to reduce the amount of federal income tax you owe.

Which Parent Gets the Dependency Exemption?

According to the Internal Revenue Code (IRS), in situations where the parents are divorced, lived separately for the last six months of the calendar year, or are legally separated or separated pursuant to a separation agreement, the custodial (majority time sharing) parent will receive the dependency exemption. I.R.C. § 152(e)(1)(A). Custodial parent is defined by the Internal Revenue Code as the parent having custody of the child for the greater part of the calendar year. I.R.C. § 152(e)(1). The child must receive over one-half of his or her support from the parents during that year and must be in the custody of one or both of the parents for more than half of the calendar year for the referenced Internal Revenue Code sections to apply. Id. In addition to the dependency exemption, the parent who claims the dependency exemption may likewise take advantage of the child tax credit, which serves as a further offset against tax liability.

Could the Non-Custodial Parent get the Dependency Exemption?

As the Internal Revenue Code is federal law, a Florida court does not have absolute power to award the dependency exemption to the non-custodial parent (parent without majority time sharing). However, “although the trial court does not have the absolute power to allocate the exemption directly, it can require the custodial parent to transfer the exemption to the non-custodial parent through the execution of a waiver.” Robertson v. Bretthauer, 712 So.2d 1140 (Fla. 3d DCA 1998). Additionally, upon being waived by the parent with majority time sharing, a court may “order rotation of the exemption, but must consider the impact of the transfer on the parties' incomes in determining support under the guidelines.” Salazar v. Salazar, 976 So.2d 1155 (Fla. 4th DCA 2008). Some parents prefer to rotate the dependency every other year. 

This exception is the major exception to the Internal Revenue Code’s regulation regarding which parent may claim the exemption. As a result, it is one of the only ways that a parent without majority time sharing may legally claim the dependency exemption on their tax return. A parent with majority time sharing may voluntarily relinquish their right to claim the dependency exemption by completing the I.R.S.’s 8332 form. It can be downloaded here for your reference

If you have questions about how your child custody arrangment could affect which parent may claim the dependency exemption, please contact and experienced Tampa or Orlando divorce attorney. 

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