Court Ordered Exemptions and the IRS

Gavel On Sounding Block

 

I have to start with the disclaimer first: I’m an enrolled agent, I’m licensed by the Department of Treasury to represent persons before the IRS. I am not an attorney. According to the rules of my license, I am not allowed to give legal advice. But I get to talk about taxes until I’m blue in the face!

Why the disclaimer? Because if you’re a divorced parent, you may have to deal with a court order that outlines who can claim your child’s tax exemption. But the IRS has its own rules about who may claim a child’s exemption, and sometimes the courts and the IRS don’t agree.

Here are the IRS rules:

  • If your divorce decree went into effect after 1984 and before 2009, the noncustodial parent may be able to attach certain pages from the decree to the tax return to claim the exemption as long as the decree has no conditions (like paying child support) instead of requiring the custodial parent to sign a form 8332 (release of exemption).
  • If the divorce decree or separation agreement is after 2008, then the custodial parent must sign a form 8332 for the noncustodial parent to claim an exemption.

Can see how this can be tricky? If you don’t sign the 8332 form , and your ex doesn’t have the proper divorce decree documents, then your ex doesn’t get the exemption as far as the IRS is concerned. You’re going to win this one on the IRS battlefield. You may have to take it to the battlefield, but if you do then you will win.

But what does a person do when there’s a court order for her spouse to claim the exemption on the children, but the husband has no right to claim the children as far as the IRS rules are concerned? What do you do if a local judge says, “You’ve got to let your ex husband claim your children for taxes? I order you to sign the 8332 form.”

I spoke with a local attorney about what could happen to a person who followed the strict IRS rules and claimed the children’s exemptions for herself when the divorce decree allowed the spouse to claim – the answer I got was to have the person call her attorney. You see, the IRS rules are all about how the IRS will settle the issue. I’m an expert at how the IRS will settle the issue. But if you’re dealing with a court order, and if your ex decides to take you back to court to enforce the exemption rule, and you defy a court order to allow him to claim the exemption, then it’s quite possible for you to see the inside of a jail cell. I don’t want anybody reading this blog to wind up in prison. So even though you should win a tax case, you should really talk to your attorney before you go against your divorce or custody decree. Make sure that you’re within your rights in your jurisdiction.

If you are the custodial parent and you are required to let your ex claim your children, remember that the exemption only includes the exemption and the child tax credit. As the custodial parent, you keep the Head of Household designation, the Earned Income Tax Credit (if you qualify), and the Child Care Credit (if that’s relevant.) See my post about splitting a child’s exemption:  Split Exemptions

If your ex claimed your child and shouldn’t have, read my post, “My Ex Claimed My Kid” for tips on how to fight back:  My Ex Claimed My Kid

Divorce is tough on everyone. It’s really tricky when you’ve got federal and state rules that don’t always mesh together either. The bottom line is that the IRS does not want to be involved in domestic disputes. If your divorce decree says that the Dad will pay child support and claim the exemption while Mom has the custody, then the IRS does not want to get involved in whether or not Dad paid that child support. That’s why the IRS rules are the way they are. Basically, they’re kicking that issue back to the local jurisdictions. If Dad wants Mom to sign the 8332, then his child support should be paid up to date. If Dad’s done everything right and Mom is still refusing to sign the 8332, then the IRS is saying it’s not their problem – Dad can go back to court and work it out from there-locally.

We used to have a saying when I was a kid: “Don’t make it a federal issue.” I don’t remember where we got it from, probably some TV show. I just remember we just always used to say it. But that’s kind of what the IRS is saying to divorced couples claiming their kids today, “Don’t make it a federal issue.”

If you’ve got a situation where the IRS rules and the court rules don’t line up, do consult your attorney about how your situation can, will, or should be handled.

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Here are some links that might help

EIC questions of any kind:  EITC Help

How to find free tax preparers:  Free Tax Help

How to find your local IRS office:  Contact Local IRS Office

 

456 thoughts on “Court Ordered Exemptions and the IRS

  1. Hi Aly,
    As far as the IRS is concerned, you’re fine. You have actual physical custody more than 50% of the year. So as far as the IRS is concerned, you’re good. What your local court will do is not something I can legally discuss, I’m not an attorney.
    But- just for the sake of argument, let’s say your ex takes you to court and they say you have to release the social so your ex can claim your child. You are only obligated to release the exemption and child tax credit. You still hang onto the head of household filing status and – if you qualify financially, the earned income tax credit. So if that happens, you will sign a form 8332 releasing the exemption – and only for this tax year. Don’t sign one of those “forever” release forms. You always want to keep the power to deny it in the future.
    You might want to read this post for more information: Split exemptions

  2. Hello,
    I went to court to file custody papers we have 50/50 custody,each year we take turns claiming my son. He is 1 I claimed last year and the court told me he can only claim him if he is up to date on child support. He is far behind on child support and told me he is going to take me to court for not giving him my sons social so he can file. What will happen if I claim my son? Also my son is only with his dad 10hours on SAturday and that’s it.

  3. Hi Justin,
    The father has the signed 8332 form in his hand and he can use it to claim his son on the tax returns. Now, for what it’s worth, your wife only signed away the exemption and the child tax credit. The 8332 does not release the child care credit, nor the Earned Income Tax Credit – if you qualify for those.

  4. My wife signed the Form 8332 to alternate years claiming her son, but the father only has him a few weekends a year. What will happen if we claim him in a year that the father’s supposed to?

  5. Hi Rosie,
    So, if your ex amended her return to take the child off, and she is not claiming that she is the custodial parent, then she should not sign the 8332. You are the custodial parent for this year. You will claim that your child lived with you for 7 months. (I realize you only had her for 6 months, but your tax software is going to require you to put 7 months in there to claim custody for the tax year.)
    If you received an 8332, then you couldn’t claim head of household – so your ex is doing you a favor.

    It sounds to me like your tax return is only claiming the exemption and the child tax credit – but you should be entitled to the full – head of household status, child care credit and EIC (if you qualify.) So – you need to make sure that you’re claiming everything – not that you are a non-custodial parent.

    Okay – and just a heads up. The IRS might go – wait, why are you trying to claim it all? Because you can! That’s why. But make sure you go back and complete all of those due diligence forms showing you as the custodial parent, and not as the non-custodial parent. That’s what needs to happen for you.

  6. hi I have a situation where 50/50 was awarded no child support claiming child every other year but my ex claimed the child when she wasn’t supposed to. irs advised me to take her back to court. I did the court ordered her to amend her returns and gave her a date deadline. she said she already amended her returns but the irs still wont allow me to take the credit without the 8332 form being signed. she doesn’t want to sign it because she says she is not the custodian parent. she did what the court ordered her to do which was to amend the return why isn’t the irs just fixing it

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