It’s common practice for parents to agree to divide claiming the children on their taxes. However, it can be a nightmare if not everyone is in agreement later on if those exemptions can be taken.
Many parents simply agree that, for example, Dad will claim Junior on his taxes in all even numbered tax years. Mom will sign IRS Form 8332 saying that Dad can claim the child, and must provide that form to Dad by February 1st. All too often, however, even if she’s signed the proper form for Dad to claim Junior, Mom instead runs to get her taxes done as soon as she receives her W-2 and claims the child instead. Dad then tries to claim the child, as is his right to do so, but his taxes are rejected by the IRS. He then can’t claim the child and by the time he can bring the matter to Mom’s attention, the filing deadline has passed, and either Mom would owe him money from what his refund would have been, or everyone has to file an amendment. This can cost money in attorney fees, tax preparer fees and does nothing for the co-parenting relationship. What to do?
The parent who will be claiming the child, let’s say, Dad, should be careful to look at his child support order. Is it a requirement that he be at least 95% current on his child support obligation for that year? If so, he needs to make sure he will be compliant by year end or if not, then settle up immediately thereafter. A quick trip to the child support clerk’s office for an account history will ensure that all child support payments have been counted and everyone is on the same page as to Dad’s compliance. Then an email or letter to Mom notifying her that Dad is in compliance and requesting that Mom sign the IRS form for him to claim the child would be next. Starting this conversation early in January can help avoid a mad rush to the courthouse to try to fix it before April 15th.
Bottom line, if it’s in an agreement or Court Order that a parent receives the tax exemption and there is either no requirement that the parent be in compliance with child support or that parent actually is compliant, then there is no reason to not allow the exemption. Claiming the child when it’s not your year to do so isn’t as simple a fix as “make-up time” or a reimbursement. It can be an expensive process resulting in a finding of contempt, which could result in an award of attorney fees. Claiming a child who was not yours to claim – while it can provide a short term windfall – can end up costing a lot more money in the end.
If you have tax questions or questions regarding exemptions, contact your tax preparer or a tax attorney well before the April 15th deadline.