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It’s Important To Understand The IRS Rules For Who Gets The Dependency Exemption

North Mississippi Herald Water Valley, Mississippi
Dear Editor,

As I began preparing tax returns for the 2023 filing year I have noticed an unusually large number of single parent returns being rejected by the IRS because someone else has already claimed the child as a dependent.

This situation usually arises due to divorce or separation of the parents and, as can be expected, leads to further conflict between them. In order to avoid the refund delay caused by this situation it is important for both parents to understand the rules concerning who gets the dependency exemption.

The custodial parent is the one with whom the child lived for the greater number of nights during the year. In most cases, due to the residency test, the custodial parent claims the child on their tax return. If the child lived with each parent for an equal number of nights, the custodial parent is the one with the higher adjusted gross income.

The other parent is the noncustodial parent. They may still be eligible to claim the child as a dependent under certain circumstances. Special rules apply for a child to be treated as a qualifying child of the noncustodial parent. The custodial parent can release the dependency exemption by signing a written declaration or Form 8332, allowing the noncustodial parent to claim the child on their tax return. This also applies to some tax benefits, including the child tax credit and additional child tax credit but not Earned Income Credit or Head of Household status.

The custodial parent generally claims the qualifying child as a dependent on their return, but it’s essential for both parents to understand who will claim the child to avoid errors and processing delays. Only one person can claim the tax benefits related to a dependent child who meets the qualifying child rules.

What should the custodial parent do to resolve this situation when the party claiming the child is unknown or refuses to cooperate in resolving the issue? File their return by mail and claim the child. The IRS will contact both filers requesting documentation about the residency of the child and correct the incorrectly filed return.

As always, tax rules are complicated and you should consult your tax advisor (preferably a CPA or EA) before filing.

Joseph (Joe) Black, Jr. CPA

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