Filing Status

The exemption automatically goes to the custodial parent, unless the divorce or paternity court has ordered the non-custodial parent to have the exemption in certain years. Awarding the exemption to the non-custodial parent can be conditioned on whether, for example, the non-custodial parent is current in paying child support. The IRS defines the custodial parent as the one that the child spent the most time with during the year. You should include overnights and school time that the child attends while the child is with you, in order to determine who has the child most of the time during the year.

If you paid someone to care for your dependent under age 13 or your disabled dependent or spouse so that you could work or look for work, you may be able to claim the Child and Dependent Care Credit on your tax return. The care must have been provided for one or more qualifying persons.

To qualify for the Child and Dependent Care Credit you must:

1. Have paid for care expenses in order to earn taxable income. If you are married, both spouses must work either full or part time. Spouses who are full time students or incapacitated are excepted.
2. Pay more than 50% of the household maintenance costs for a qualifying dependent.
3. File your tax return jointly if married, unless the separation rules apply.
4. Hire someone other than your child (under age 19 at the end of the tax year), your spouse, or a person you can claim as a dependent.
5. Have qualifying expenses over and above any tax free reimbursements from your employer.
6. Report on your tax return the name, address, and taxpayer identification number of the child care provider. If the care provider is a tax exempt organization, the taxpayer identification number is not required.

If you have children who are under age 17 as of the end of the year, you can get a $1,000 tax credit per child on your tax return. A tax credit reduces your tax bill dollar for dollar. If you have three qualifying children, for example, you can cut your tax bill by $3,000. The credit does not affect the exemptions that you take for dependents. If your adjusted gross income is above a certain amount, the credit is limited.

Some people realize that they need to hire an accountant for the first time in their lives, if they are going through a divorce or other litigation. It is imperative that you gather all of the information that you can, in order to determine what exemptions and deductions that you are entitled to or not entitled to. If, for example, the use of exemptions for the children do not bring a tax benefit to one party, then the parties should negotiate so that the exemptions are treated properly in the settlement or litigation.

If your divorce decree is dated January 1, 2009 or later, the Internal Revenue Service requires that you not only provide it with a copy of the pertinent pages of the divorce decree, but also with Form 8332 signed by your spouse, in order for you to claim the exemption. If your divorce decree is dated December 31, 2008 or before, and it gives you the exemption without any preconditions, then you can claim the child. You must file your return by mail and attach pertinent copies of your divorce decree, each and every year for which you are claiming the exemption.