Tax Time: a word of caution for divorced parents and family lawyers

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Its tax time again, and divorced parents and family law practitioners should be aware of the IRS rule that went into effect in 2009.  Prior to that, a non-custodial parent could claim exemptions for their children if it was part of a divorce decree or child support order.  The parent need only file a copy of the order with his or her tax return.  For any decree filed after 2009, the IRS requires  Form 8332  to be filed with the return.  Form 8332 provides for the custodial parent to sign a release for his or her claim of exemption.  There is a provision on the form for exemptions in future years;  but there is also a provision to revoke release of  the exemption.  Therefore, a post 2008 court order providing that a non-custodial parent can claim the exemption is not effective for a non-custodial parent to claim the exemption.  A non-custodial parent will have to rely on the custodial parent’s good faith to continue to release the exemption.  In the past, an agreement for the non-custodial parent to claim the tax exemption was often part of negotiations concerning child support.  Now it  may be difficult to use that as a bargaining tool, because of the custodial parent’s ability to revoke his or her release of claim for exemption by simply filing an 8332 form.