Hopefully, the new year will bring you positive changes and be all you could possibly desire. But there is one aspect of nearly everyone's life that will remain ever-present; filling out a tax return and sending it to the IRS. And if you are a parent who divorced this past year, you may have to alter your return from previous years in recognition of your new payer status.
One of the most important issues that you and your ex-spouse will need to address is which one of you can claim exemptions for your child on your tax returns. The unfortunate fact is that only one of you can do this; you cannot split the dependency exemption. So, which parent gets to put in for the tidy deduction?
Typically, it is the custodial parent who receives the exemption based on the assumption that he or she provides over half of that which went toward supporting the child. However, under certain conditions, it is possible for the noncustodial parent to be acknowledged as the one who paid over half of the money that went toward caring for the child.
In fact, it is possible that the custodial parent could sign a copy of IRS Form 8332, or another similar statement, that will forfeit his or her claim to the exemption. The form or statement could then be attached to the noncustodial parent's tax return.
It should be noted that such releases are the exception rather than the rule. However, there are other so-called "tiebreakers" which could also be used to determine which parent is eligible to receive the exemption benefits.
Determining which parent should receive such a significant tax exemption could prove both complicated and contentious. As such, if you are debating the issue with your ex-spouse, you may want to seek clarification by speaking to a child support attorney. The attorney could go over your current financial arrangement and help you work toward a solution to your dispute.