Can A Non-Custodial Parent Receive The Dependency Exemption?

On behalf of The Marks Law Firm, L.L.C. posted in Child Support on Friday, April 26, 2013

One question we field often from clients involves the right to claim the child as a dependent on their federal and state income taxes. Usually, clients believe that alternating the dependency exemption every other year would produce a fairer result, given that the dependency exemption will reduce the overall burden of the parent claiming the exemption. The relative fairness increases as the disparity between the incomes of the parties increases. However, getting to that seemingly fair place is not an easy task, for a variety of reasons.

First, the Internal Revenue Code presumes that the custodial parent claims the dependent child every year, because the custodial parent has the child the majority of the time, and physical time is what the IRC uses to measure the legitimacy of the dependency claim. But wait, you may ask. I earn far more than my ex and I already pay a lot in child support, so why should I lose the tax advantage that comes with the dependency exemption, particularly since I cannot deduct all of the daycare expenses I pay? Good question, and fair point. But the IRC strictly views the exemption as a benefit for majority time, even though both parents have to maintain households, feed and clothe the child, and cover a myriad of related expenses. It may not make sense to do it this way (why not allow a split exemption of proportionate time?), but we are talking about the IRC after all.

So am I, as the non-custodial parent completely out of luck? No. While the IRC traditionally assigns the exemption to the custodial parent, the IRC also allows one parent to assign the exemption to the other parent in a given year. Hence, a family court has the ability under federal law and Missouri law to grant the non-custodial parent the tax exemption in some years.

But…the child support guidelines make this process a bit more complicated. In creating the presumed child support amounts (PCSA), our supreme court makes many assumptions about sums each parent pays to support the child. One of the assumptions is that the custodial parent has the tax exemption, which means that the support amounts assume a lower tax burden for the custodial parent. Removing the tax exemption in a given year will decrease the assumed income for the custodial parent. So, for a family court judge to help out the custodial parent and award alternating years of claiming the exemption, that judge will have to (a) find the PCSA unjust or inappropriate, (b) state the reasons for that finding, which usually includes a discussion of the relative benefits and burdens to each parent with and without the exemption and how the additional funds enable the non-custodial parent to meet child support obligations and additional expenses, and (c) set forth specific orders regarding the execution of the IRC waiver in years where the non-custodial parent claims the exemption.

A non-custodial parent can secure the tax exemption, but it will require a well-written judgment that follows all necessary procedures. Because doing so means a finding that the PCSA is unjust or inappropriate, a judge may hesitate to do so, or may not see enough evidence in the relative financial benefits and burdens to each parent. Securing that tax exemption will require persuasive and skilled lawyering.

If you have questions about the dependent tax exemption, contact us – we can help.

Recent Posts

You need an experienced divorce attorney on your side.