New rules for divorced parents & depedent deductions

The IRS issued in 2007 regulations addressing various issues pertaining to divorced parents and who can claim the dependent exemptions. These new rules take affect for most divorced parents with the filing of your 2009 income tax return.

Beginning for years beginning after July 2, 2008 (so 2009 for calendar year individual taxpayers) the IRS will no longer accept a divorce decree in lieu of Form 8332, Release of Claim to Exemption fro Child of Divorced or Separated Parents, even if the decree contains all of the information otherwise found on the Form 8332 and is not conditional in any respect (for example, conditioned on child support payments being current, etc.).

So, if your ‘relationship’ with your ex-spouse is a problem and that spouse is the custodian of your child(ren) you should start preparing to make nice so that you can get Form 8332 otherwise you’re out of luck for taking that exemption on your tax return.

How do you determine who the custodial parent is? The regulations define the custodial parent as the parent with whom the child resides for the greater number of nights during the year. The regulations clarify that:

• The child resides for a night with a parent if the child sleeps at the parent’s residence whether or not that parent is present; or
• The child is in the company of the parent when not at the parent’s residence (for example, when parent and child are on vacation together); or
• If at neither parents’ residence, then the child is deemed to reside for that night with the parent with whom the child would have resided, if that can be determined; and
• A night that extends over two calendar years is counted in the year in which the night begins (ah, happy new year!).

If you have any questions about whether or not you are able to claim the dependency exemption for your child feel free to drop me a note.

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