In order for a non-custodial parent to claim an exemption for a child on a tax return, the parents are required to fill out a Form 8332, which is available from the IRS website, or from your local IRS office.  It is very important to make sure you fully understand the form before filling it out and filing it however to avoid potentially costly mistakes.  If necessary, seek the advice of a tax professional in your area.

First, it is important to realize that each year the non-custodial parent tries to file taxes with an exemption claimed for the children this form must be attached or the exemption will not be allowed.  This form is required because the custodial parent is required to sign it giving permission for the non-custodial parent to file the exemption.  This means the custodial parent is not allowed to file the exemption for the year the form is signed.  Even if the non-custodial parent files taxes after the custodial parent, once this form has been signed the custodial parent cannot change their mind.

There are several circumstances where the IRS has determined it is acceptable for the non-custodial parent to claim the child.  Remember, the form must still be attached to all tax filings in order for the exemption to be claimed.

First, the non-custodial parent may claim the exemption if the child received at least half of their support from at least one or both of their parents.  Any state aid or public assistance money does not count as being provided by the parents.  If the parents are not providing at least half of the child’s support then the parents do not have the right to claim the exemption.

Second, the child must have been in the custody of at least one of the parents for more than half of the year.  If your child was in state custody for 8 months then you are not allowed to claim the exemption. If however, the child was in both of your custody for 5 months, then lived with one parent or the other for the remaining 7 months then one of the parents is allowed to take the deduction.

Third, the custodial parent must fill out the Form 8332 giving the non-custodial parent legal, binding permission to claim the child’s exemption.  This applies even if an exemption is specified in the divorce decree if the decree was ordered after the year 1984.  In contrast if a divorce was finalized before 1985, then the non-custodial parent may claim the exemption if they provided at least $600 and were awarded a specific exemption of the child in the divorce decree.  

Additionally, divorces ordered before 1985 must also have one of the following circumstances in order for the non-custodial parent to be allowed to claim the exemption.  First, the parties must be divorced or at least legally separated.  Second, if the parties are only separated, it must be a legal, written separation.  Third, the parties must have lived apart for at least the last 6 months of the previous year.  Assuming all of those guidelines are meet, then the non-custodial parent is allowed to claim the exemption.  

As you can see, there are several very important rules and guidelines that accompany Form 8332.  It is best to discuss fully with your attorney all guidelines and restrictions that may apply to your case to ensure that you are well aware of your rights, as well as the rights of the other spouse.  Remember, a mistake on taxes can be a very costly mistake to correct later on, even if it was an honest mistake because of a misunderstanding.