Divorce decree exemption election


M

mmurrell

Mom and Dad's divorce was final in November, 2007. Mom got the house,
and Dad moved out.

Daughter (10th grade) lived in that house all of 2007. The divorce
decree states the parents will alternate the daughter's dependency
exemption every other year beginning with dad getting the exemption in
2007.

Mom and Dad now realize that if Mom could take the dependency
exemption in 2007, the daughter would qualify for OLAP (a four year
college tuition paid program for low income earners). HUGE!

2007 is the last year for the daughter to qualify. Dad's 2007 income
is too high for the daughter to qualify.

This is different than everything I am reading because the NON-
custodial parent would be giving up his dependancy exemption, and
going against the divorce decree. Can this be done through a 8332?
Can the divorce decree be changed now? What advise can I give Mom and
Dad?
 
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B

Bill Brown

Mom and Dad's divorce was final in November, 2007.  Mom got the house,
and Dad moved out.

Daughter (10th grade) lived in that house all of 2007.  The divorce
decree states the parents will alternate the daughter's dependency
exemption every other year beginning with dad getting the exemption in
2007.

Mom and Dad now realize that if Mom could take the dependency
exemption in 2007, the daughter would qualify for OLAP (a four year
college tuition paid program for low income earners). HUGE!

2007 is the last year for the daughter to qualify.  Dad's 2007 income
is too high for the daughter to qualify.

This is different than everything I am reading because the NON-
custodial parent would be giving up his dependancy exemption, and
going against the divorce decree.  Can this be done through a 8332?
Can the divorce decree be changed now?  What advise can I give Mom and
Dad?
Form 8332 will do the trick for federal taxes. No matter which state
mom and dad live in, I'm not an expert on its divorce laws. I also
know nothing of the rules of OLAPs.
 
M

mmurrell

Form 8332 will do the trick for federal taxes. No matter which state
mom and dad live in, I'm not an expert on its divorce laws. I also
know nothing of the rules of OLAPs.

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All the boxes and insturctions for the form 8332 indicate this form is
for the CUSTODIAL parent to release their dependency expemtion.....not
the NON-CUSTODIAL parent. This is why I posted. Would an 8332 really
work???
 
P

Paul Thomas

mmurrell said:
Mom and Dad's divorce was final in November, 2007. Mom got the house,
and Dad moved out.

Daughter (10th grade) lived in that house all of 2007. The divorce
decree states the parents will alternate the daughter's dependency
exemption every other year beginning with dad getting the exemption in
2007.

Mom and Dad now realize that if Mom could take the dependency
exemption in 2007, the daughter would qualify for OLAP (a four year
college tuition paid program for low income earners). HUGE!

2007 is the last year for the daughter to qualify. Dad's 2007 income
is too high for the daughter to qualify.

This is different than everything I am reading because the NON-
custodial parent would be giving up his dependancy exemption, and
going against the divorce decree. Can this be done through a 8332?

Yes.




Can the divorce decree be changed now?


It can if they want to change it, which costs money, or they can just do a
verbal exchange. Well, get the thing in writing on the 8332 who gets to
claim in what year(s)....stretch the thing out as far as you need to go.
Till the kid is 24 at least.



What advise can I give Mom and Dad?

Work it out.
 
P

Paul Thomas

mmurrell said:
All the boxes and insturctions for the form 8332 indicate this form is
for the CUSTODIAL parent to release their dependency expemtion.....not
the NON-CUSTODIAL parent. This is why I posted. Would an 8332 really
work???



Yes, and they should make the changes in the years on that form, allocating
who claims in what year(s).



The IRS will see this document as binding over any and all other papers -
till the kid can no longer be claimed by anyone.
 
A

Alan

Paul said:
Yes, and they should make the changes in the years on that form, allocating
who claims in what year(s).



The IRS will see this document as binding over any and all other papers -
till the kid can no longer be claimed by anyone.
As the mother was the custodial parent in 2007 (OP stated that
the child resided 12 months in the house that the mother lived
in) it is the mother that must complete the Form 8332.

Without a copy of the divorce agreement to look at, it is quite
possible that the agreement is nonbinding as far as the IRS is
concerned. When tax law was changed at the end of 2005, the
custodial parent became the parent who had custody for more time
in the tax year. The noncustodial parent could only get the
exemption if released by the custodial parent using the proper
format or the 8332 or there was conforming language in the
divorce decree. This change to the definition of custodial parent
for purposes of the dependency exemption trumps anything in a
divorce decree regarding who is the custodial parent.

The wording in the decree would have to state that in any year
that a noncustodial parent is entitled to the exemption, it is
without conditions; it must say that the custodial parent will
not claim the exemption in any year in which it goes to the
noncustodial parent; and it must identify the years in question.
In addition, the decree must have the custodial parent's
signature. (I know of at least one court case where this last
element was lacking and the court ruled for the custodial parent
as she had never signed the divorce decree. It was signed and
filed by her attorney.)
 
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B

Bill Brown

All the boxes and insturctions for the form 8332 indicate this form is
for the CUSTODIAL parent to release their dependency expemtion.....not
the NON-CUSTODIAL parent.  This is why I posted.  Would an 8332 really
work???
Oops. Then nothing needs to be done except for the non-custodial
parent to NOT claim the dependency exemption and for the custodial
parent to do so.
 
P

Phil Marti

mmurrell said:
Mom and Dad's divorce was final in November, 2007. Mom got the house,
and Dad moved out.

Daughter (10th grade) lived in that house all of 2007.
She also lived in that house with each parent more than 6 months of the
year. That means she is the "qualifying child" of both parents for 2007.
Tax law couldn't care less which parent claims her, as long as only one
parent claims her. No paperwork is required other than one parent's return
claiming the exemption and one not.

Everything else that's been discussed involves "tie-breakers" for
determining who gets the exemption if both parents claim it. It's all moot
if the parents agree.
The divorce
decree states the parents will alternate the daughter's dependency
exemption every other year beginning with dad getting the exemption in
2007.
They should check with their divorce lawyers to see whether they need to go
to court to alter the agreement for 2007. If their plan is to keep
everything as it was, except swap the even/odd years, a revised order would
be helpful even if the lawyers don't think it's needed for 2007.
 
P

Paul Thomas

Alan said:
As the mother was the custodial parent in 2007 (OP stated that the child
resided 12 months in the house that the mother lived in) it is the mother
that must complete the Form 8332.

Yes indeed. If they both wish to have the custodial year(s) changed for
some reason, then they both work it out and sign off on the 8332. I
recommend doing so for multiple years.




Without a copy of the divorce agreement to look at, it is quite possible
that the agreement is nonbinding as far as the IRS is concerned.

The IRS is never party to the divorce and can't be held to what those two
dictate in the decree.
 
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E

eagent

Mom and Dad's divorce was final in November, 2007.  Mom got the house,
and Dad moved out.

Daughter (10th grade) lived in that house all of 2007.  The divorce
decree states the parents will alternate the daughter's dependency
exemption every other year beginning with dad getting the exemption in
2007.

Mom and Dad now realize that if Mom could take the dependency
exemption in 2007, the daughter would qualify for OLAP (a four year
college tuition paid program for low income earners). HUGE!

2007 is the last year for the daughter to qualify.  Dad's 2007 income
is too high for the daughter to qualify.

This is different than everything I am reading because the NON-
custodial parent would be giving up his dependancy exemption, and
going against the divorce decree.  Can this be done through a 8332?
Can the divorce decree be changed now?  What advise can I give Mom and
Dad?

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used,   >>
<< nor can it used, for the purpose of avoiding penalties  >>
<< that may be imposed upon the taxpayer.                  >>
<<                                                         >>
<<   The Charter and the Guidelines for submitting posts   >>
<<  to this newsgroup as well as our anti-spamming policy  >>
<<                  are atwww.asktax.org.                 >>
<<         Copyright (2007) - All rights reserved.         >>
<< ------------------------------------------------------- >>
First and foremost - neither the domestic courts, the domestic master
(Maryland's version a judge in divorce court), the attorney's nor the
parents get to make Federal tax law. Many attorney's and judges
overlook this little fact and try to "declare" and arrange for all
sorts of things that they have no legal ability to adjust.

If you remember nothing else, remember this - TAX LAW is governed by
the theory of substance over form. You have to look the substance of
the issue and NOT JUST the written form to determine the proper tax
treatment. And unless the attorneys were smart enough to get a tax
pro involved who is well versed with divorce planning the likelihood
exists that there are tax traps in the decree.

A divorce is much like a contract in two very important ways. First,
its governed by the legal theory of FORM over substance. So you look
first to the form of the document to try to determine the correct
legal (NOT TAX) treatment. But more importantly, it CAN BE CHANGED
with the mutal consent of all parties.

With that being said - and with the caveat that IANAL - all your
parents have to do is to agree to switch the years in which each will
claim the daughter. I would strongly recommend that they reduce this
to a writing, signed by both parents in the presence of disinterested
witnesses. With that done, there should be NO PROBLEM in mom claiming
the daughter as a dependent.

You didn't say when mom and dad separated, just that the divorce was
final in November 2007 and that the daughter lived in the house for
all of 2007. IF mom and dad separated in May or earlier and the
daughter lived with mom in the house, then mom might qualify for Head
of Household and the daughter may be a qualifying child for the
purpose of the EIC.

I am NOT familar with the OLAP program, but I would also suggest that
you look at it closely and make sure you understand their definition
of dependent. It may be that their definition has nothing to do with
the claiming of a child on a tax return - but I really don't know.

Good luck,
Gene E. Utterback, EA, RFC, ABA
 

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