In many family law cases, it is common that parties agree or judges will order parents to alternate claiming the children as dependants on their State and Federal Income tax returns (or that each claim one child in each year). However, as discussed in the article below, the Decree of Dissolution or Court’s Order may not be adequate to effectuate the terms in the Decree.
The problem stems from the fact that, in order for the noncustodial parent to claim the child(ren) on her/his tax return, the custodial parent must sign the IRS Form 8332, thereby relinquishing her/his right to claim the children as dependants for that tax year.
The advice in this article is practical and, unfortunately, correct. If one party refuses to sign the IRS Form 8332 required by the noncustodial parent to claim the child(ren) on his/her tax return, the issue can become a headache to remedy due to the time and attorneys fees associated with correcting the issue. Thus, if you believe your ex-spouse may be inclined to act in contravention of the terms of your Decree, you may consider focusing on other terms/issues and concede on the issue of claiming the child(ren) on your individual tax returns.
While measures may be taken to ensure one party's compliance, such as including language that the party who does not comply with the terms of the Decree be responsible for any attorneys fees incurred by the complying party to effectuate its provisions, if the violating party does not have the money to pay the awarded attorneys fees, this may be a futile request (and the basis of their erroneously claiming the exemption to begin with).
For the full-text article please visit the following link: http://www.forbes.com/sites/peterjreilly/2012/09/25/dependency-exemptions-divorce-court-orders-not-binding-on-tax-court/