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Special rules apply for determining who can claim the dependency exemption for a child in cases where the parents are divorced, legally separated, or have lived apart for the last six months of the calendar year, and are not filing a joint tax return.
For purposes of the support test, the support provided by the parents is combined, and the sum must be greater than one-half of the child's total support.
Residency Tests. Because of the residency test, a child is usually the "qualifying child" of the custodial parent. Thus, absent an agreement between the parents, the custodial parent is entitled to claim a dependency exemption for the child.
The question of who has custody of the child is normally determined under the divorce decree, separation agreement, or custody agreement. If there is no such agreement, physical custody of the child is the controlling factor.
If there is no agreement between the parents, the IRS considers the custodial parent to be the one with whom the child lived for the greater number of nights during the year. A child lives with a parent for a night if he sleeps either at that parent's home or in the company of the parent at another location (for example at a hotel on vacation.) If the child sleeps the same number of nights with each parent, the parent with the higher adjusted gross income is considered to be the custodial parent, who is entitled to the dependency exemption.
Noncustodial parent entitled to exemption. The parent without custody of the child is allowed to claim the dependency exemption only if the custodial parent makes a written declaration relating the exemption. This declaration can be for one year, a specified number of years, or for all future years.
The IRS has provided Form 8332, Release of Claim to Exemption for Child of Divorced or Separated Parents, which can be used to make this declaration, but any statement that contains the information requested on the form will suffice. The Form 8332 or the statement must be attached to the tax return of the noncustodial parent. If the declaration covers more than one year, the original should be attached to the return for the first year and a copy must be attached to the return in the subsequent years.
For post-1984 and pre-2009 agreements, the non-custodial parent may be able to attach pages from the divorce decree rather than attaching Form 8332 or a similar statement. The attached pages must state the years in which the noncustodial parent is entitled to the exemption. The decree must also state that the noncustodial parent must have an unconditional right to the exemption and the custodial parent will not claim the exemption for the year. The page with the custodial parent's signature must also be attached.
Revocation of release of claim to an exemption. Rules allow the custodial parent to revoke a release of claim to exemption. The custodial parent must provide, or make reasonable efforts to provide, the noncustodial parent with written notice of the revocation. The revocation will become effective no earlier than the tax year following the year in which the notice was given. Part III of Form 8332 can be used to revoke the release of the claim to exemption. The custodial parent must attach a copy of the revocation to his or her return for each tax year he or she claims the child as a dependent following the revocation.