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 also use it.

Like other issues settled in a New Jersey divorce action, the dependency exemption can be bargained away by the custodial parent. In cases where the non-custodial parent is the higher earner, the exemption is more valuable to that parent. This may serve as an incentive to offer valuable consideration in exchange.

For the non-custodial parent to claim the dependency exemption (one exemption per child, per tax year), a few conditions must be satisfied:

• The custodial parent must agree to waive their right to the exemption.

• The custodial parent must completeIRS Form 8332 titled "Release/Revocation of Release of Claim to Exemption of Child by Custodial Parent."

Without this completed form filed with the IRS, the non-custodial parent cannot claim the child as a dependent in any given year.

More Than Half of the Financial Support Requirement

Another condition requires that the non-custodial parent has provided more than half of the child's financial support for the year in which they seek to use the exemption.

Additional requirements may also apply. Since tax laws are subject to change, consult the IRS or an accountant to ensure you meet all current criteria.

The Value of the Exemption

The deduction amount for each exemption increased in 2012 to $3,800.00. If you pay for daycare, you may also qualify for the Child and Dependent Care Credit, worth up to $2,100.00, depending on the number of children and your child care expenses.

If claiming additional dependents reduces your tax bill, you can adjust your paycheck withholdings by filing a new W-4 form with your employer. You may also factor in the child tax credit on your W-4 to further reduce withholding.

The attorneys at Villani & DeLuca work closely with financial planners and accountants to determine the best approach for all tax-related issues, including the allocation of the IRS dependency exemption.

Determining which divorcing spouse may claim child-related tax deductions is often an overlooked part of divorce proceedings. Tax deductions carry significant financial weight, and understanding how tax laws impact your divorce is essential.

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. He is one of a limited number of attorneys in the state to hold this prestigious designation.

Mr. DeLuca's practice is devoted to family law in Ocean County and Monmouth County. He 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 concerns. The firm offers free, no-obligation consultations!