Every year at tax time, we encounter a variety of situations relating to divorced spouses claiming their children. In prior years, there were various ways used to justify who claimed which child. Sometimes the spouses agreed who claimed who and sometimes they didn’t. For years, the state court systems would approve divorce agreements that specified which spouse claimed which children in which years. This led to the popular odd year/even year approach. Over the years, other ways were used to decide which spouse claimed which children. This led to much confusion and litigation. The Treasury department has come under increasing pressure in recent years to develop standard rules that apply in all cases in determining the criteria for divorcing spouses claiming their mutual offspring.
Finally, about three years ago the Treasury department issued guidelines that are mandatory, and the IRS is taking a hard stance on enforcing these rules. It boils down to this: The custodial parent claims the children by default. If the divorce decree or separation agreement specifies both spouses have joint custody, the spouse with whom the children sleepover the most gets to claim the children. Taxpayers who assert the children stay with both spouses equally are philosophically incorrect. There are an odd number of days in a year, one spouse or another will have a majority, even if it is by one day.
A state-sanctioned divorce decree or separation agreement is a state document. Since federal law overrules state law, the Treasury regulations take precedent over any state court divorce documents. The IRS is also not bound by its provisions in any way. Your attorneys can write anything they want into the divorce agreement, but the Treasury regulations override it!
If a spouse who does not have custody gets granted the right to claim a child as a dependent in a divorce document, the custodial spouse must waive their right to claim that child in writing. This is done by executing a form 8332 and attaching it to your income tax return when it is filed. The custodial spouse may waive their right to claim a child forever, or for one year at a time. The rules for claiming dependent children are a little clearer now. It doesn’t matter what your divorce lawyer writes into your documents. The IRS doesn’t have to abide by it.