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Child Custody and the IRS Dependency Exemption

Posted by Vincent C. DeLuca | Nov 01, 2010 | 0 Comments

Who Can Claim the IRS Dependency Exemption?

The IRS dependency exemption is a tax benefit usually enjoyed by the custodial parent. However, there are instances where the non-custodial parent can use the dependency exemption.
The dependency exemption, like other issues to be settled in a New Jersey divorce action, can be bargained away by the custodial parent. For example, in cases where the non-custodial parent is the higher earning of the child's parents, the dependency exemption is more valuable to that parent.
The prospect of being awarded the dependency deduction may provide an incentive for that party to exchange for it some valuable consideration to the other parent. However, for the non-custodial parent to take advantage of the dependency exemption (there is only one exemption per child, per tax year), a few conditions must be satisfied.
For example, and as alluded to above, the custodial parent must agree to waive his or her right to the dependency exemption. In order to do so, the custodial parent must complete IRS Form 8332 entitled “Release/Revocation of Release of Claim to Exemption of Child by Custodial Parent”. Without this form being completed and filed with the IRS, the non-custodial parent would be unable to claim the child as an exemption in any given year.

More Than Half of the Financial Support Requirement

Another condition is that the non-custodial spouse has provided more than half of the financial support for the child in the year in which the non-custodial parent seeks to use the dependency exemption.
There are other requirements the non-custodial parent must meet in order to take advantage of the dependency exemption. Tax laws are subject to change, so be sure to check with either the IRS or an accountant if you are a non-custodial parent and you want to take advantage of the dependency exemption.

The Value of the Exemption

The amount you can deduct for each exemption has increased in 2012 to $38,000.00. Additionally, in the event you pay for daycare, you may be able to use the Child and Dependent Care Credit. This credit can be worth up to $2,100.00. The exact amount depends on the number of children and the amount that you spend on child care.
In the event that you are claiming any additional dependents and your tax bill would be reduced, you can cut back on tax withholdings on your paychecks. You would need to file a new W4 form with your employer to claim an additional withholding allowance. You can also take the child credit into account on your W4 to reduce your paycheck withholding even more.
The attorneys at Villani & DeLuca work closely with financial planners and accountants in order to determine the best manner within which to handle any and all tax issues including, but not limited to, the allocation to the IRS tax dependent exemption.
Trying to determine which of the divorcing spouses is permitted to take the income tax deductions for expenses related to the child is often an overlooked aspect of the divorce proceeding. Without question, tax deductions can have great meaning from a financial prospective and it is essential that you have a better understanding of how the tax laws impact your divorce.

Call an Experienced Child Custody Attorney

Vincent C. DeLuca of Villani & DeLuca, P.C., is certified by the New Jersey Supreme Court as a Matrimonial Attorney. Mr. DeLuca is one of a limited number of attorneys to hold the prestigious certification of Matrimonial Attorney in New Jersey. Mr. DeLuca, whose practice is devoted to family law in Ocean County and Monmouth County, is one of only five Certified Matrimonial Attorneys on the Roster of Mediators for Economic Aspects of Family Law in Ocean County, New Jersey.
Call Villani & DeLuca today to speak with an experienced New Jersey divorce lawyer about your child custody issue and have all of your questions answered. The firm offers free, no obligation consultations!

About the Author

Vincent C. DeLuca

Vincent C. DeLuca, a partner of the firm, devotes the entirety of his practice to family law. Vince is a trained divorce mediator and collaborative divorce attorney. Vince is certified by the Supreme Court of New Jersey as a matrimonial law attorney. Less than .002% of all practicing attorneys in...


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