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Who Should Take The Child Dependency Exemption In A Divorce or Paternity Action?

by Steve Fritsch on December 24, 2012

If child support is ordered many assume that the custodial parent should automatically claim the child as a dependency exemption on their taxes.  They think that if they allow the non-custodial parent to claim the child they will be out a lot of money when they file their return.  Although in many cases this is true, it is not in all and in some cases can actually reduce the money the custodial parent can receive.

Generally, the custodial parent (the parent that has custody of the child for the majority of time) is allowed to claim the child as a dependency exemption on their taxes.  However, the non-custodial may claim the child if there is an agreement between the parties or a court order. If the non-custodial parent claims the child, the parties must complete IRS Form 8332.

When should the custodial parent allow the non-custodial parent to claim the child?  When the custodial parent receives no financial benefit from claiming the child.  This may happen when the custodial parent’s income is so low that claiming the child has no financial benefit to him or her.  In these type of situations, the custodial parent is essentially wasting the exemption and losing out on more child support because if the custodial parent takes the exemption their child support will be lower.  Rather, if the custodial parent allowed the non-custodial parent to claim the child, the child support would increase.  If spousal support has also been ordered, it may affect whether the custodial parent takes or gives away the  exemption.  Most family law attorneys have computer programs that can show what the child support calculations would be depending on who takes the exemption.  It would also be advantageous for the costodial parent to contact whoever prepares his or her taxes prior to the court hearing to determine if he or she would receive a greater financial benefit from claiming the child or not.

As you can see, failing to address the exemption issue, could cause the custodial parent to give up money that he or she could receive.  Therefore, it is important to carefully analyze this issue in order to receive the greatest financial gain.

DISCLAIMER:  The above article is for informational and educational use only and is not intended to be legal advice in any way.  If legal advice is needed, one should contact an attorney.

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