With tax season quickly approaching, a lot of our clients, especially those with children, ask us about the dependency exemption. Which parent claims the exemption, and can the noncustodial parent ever claim the exemption? After all, they are the ones paying child support.
The Internal Revenue Service is very clear about the fact that only one taxpayer can claim the dependency exemption for a child each year. As a general rule, the custodial parent is the taxpayer who claims the dependency exemption, but that does not mean that it’s impossible for the noncustodial parent to claim the dependency exemption.
If you are the noncustodial parent (the parent paying child support) and your child’s other parent agrees to let you take the dependency exemption for the year, then all they have to do is sign a Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, and you would simply attach this form to your tax return.
If the custodial parent agrees to have you claim the dependency exemption for a certain tax year, he or she will not be able to claim the child tax credit for the child. That is because only one taxpayer can claim the dependency exemption for a specific tax year.
If you have more than one “qualifying child,” and you claim the dependency exemption, the IRS allows you to claim one exemption for each child that qualifies as a dependent.
Under the IRS’ rules, a qualifying child would be your biological son or daughter, or a stepchild or foster child who is under the age of 19. Additionally, the child must have lived with you for more than half of the year, unless of course you are the noncustodial parent and your ex agrees to let you take the dependency exemption for the year.
How much is the dependency exemption?
If you are able to claim the dependency exemption, the exemption amount for 2016 is $4,050 per child. For every child that you’re able to claim the exemption, you will need to include each child’s Social Security number on your tax return. If you do not provide your children’s Social Security numbers, the IRS may not allow you to take the exemption claim.