Child Support: Statutory And Contractual (Page 13 of 23) in pdf

Child Support: Statutory and Contractual

Chapter 10

circumstances, the prior temporary regulations remain

is to apply to all future years is treated as applying to

―the first taxable year after the taxable year revocation

in effect (see 26 C.F.R. §1.152-4(e)(5), but for our

is executed‖ and all subsequent years.

purposes for representing current clients, today and the

future will be discussed.

Expiration of a Release

Written Declarations Executed after July 3, 2008

A release signed by a custodial parent is no longer

effective once the parties’ child turns eighteen years of

If the written release was or is executed after July

2, 2008, it must conform to the new permanent

age. This is because a child is not considered to be in

regulations. IRC §152(e)(2) Most releases executed

possession of either parent after reaching the age of

after December 31, 2008 must be accomplished using

majority. Regs. § 1.152-4(e)(3)(ii).

either Form 8332 or a document that is executed "for

the sole purpose of serving as a written declaration"

Effect of the Release of the Exemption on Head of

under IRC § 152(e)(2), and that is not conditional. The

Household Status and Child-Related Credits

permanent regulations specifically exclude decrees of

In addition to the dependency exemption, there

divorce and separation agreements from qualifying as a

are six other commonly used tax benefits available to

written declaration. Regs §1.152-4(e)(ii).

tax-payers with children if they meet the statutory

In other words, in the opinion of this presenter,

requirements:

the form itself can not indicate that it is contingent

upon an event or not, but contingency on whether it is

the child and dependent care tax credit;

or is not executed by the custodial parent is allowed.

the child tax credit;

the earned income credit;

Determining the Custodial Parent

the American opportunity credit;

Determining

the

custodial

parent

can

the lifetime learning credit; and

problematic in this age of true shared parenting time.

head of household filing status.

For purposes of IRC §152 (e), the custodial parent is

defined as a parent who has custody for the greater

Each benefit has separate criteria to determine a

taxpayer’s eligibility to claim the benefit with respect

portion of the year. However, there is a tie-breaking

rule that, if the child resides for an equal number of

to any given child. These criteria include, inter alia,

the taxpayer’s relationship to the child, the child’s age,

nights with each parent, the parent with the highest

adjusted gross income is treated as the custodial parent.

and whether the child is claimed as a dependent of the

Regs. § 1.152-4(a). And this presenter understands that

taxpayer. See generally IRS Publications 17, 503, 972

it is tne number of nights allocated with a parent that is

and 970 which discusses the above credits.

controlling, not the actual number of nights spent with

Release of the dependency exemption to the

a parent. This may be important in negotiating shared

noncustodial spouse does not necessarily result in the

parenting times if no agreement is reached on the

release of the foregoing credits.

personal exemption.

Read that last sentence again.

The release of the dependency exemption by the

Revocation of a Release

custodial parent results in the following credits also

being ―released‖ to the noncustodial parent: the child

A custodial parent may revoke a release of the

dependency exemption by providing a written notice of

tax credit (IRC § 24(a)); the American opportunity

the revocation to the other parent. Id. Regs. § 1.152-

credit; (IRC §25A) and the lifetime learning credit. Id.

4(e)(3)(i).

However, a written notice revoking the

However, the following credits remain available

release of the exemption can be effective "no earlier

to the custodial parent (and unavailable to the

than the taxable year that begins in the first calendar

noncustodial parent) in spite of the signing of a release:

year after the calendar year in which the parent

revoking the written declaration provides, or makes

the earned income credit. IRC § 32(c)(3).

reasonable efforts to provide, the written notice" to the

Head-of-household status is also retained by the

other (noncustodial) parent. Id. In other words, a

custodial parent. To file as head of household with

revocation of the release cannot be effective until the

respect to a son or daughter, a parent must maintain "as

year after attempts are made to provide it to the

his home a household which constitutes for more than

noncustodial spouse. A release executed in May, 2012

one-half of such taxable year the principal place of

is effective only starting tax year 2013.

abode" of that son or daughter. IRC § 2(b)(1). Thus,

A revocation of the release can either be on Form

head-of-household status is available only to the

8332 or other written declaration that conforms to the

custodial parent.

substance of that form, and it must be ―executed for the

But wait, how aggressive does your client want to

sole purpose of serving as a revocation.‖ Regs. §

be on this issue and will the IRS really take the time to

1.152-4(e)(3)(ii). A written declaration that indicates it

do figure this out? Do you negotiate and allow/contract

Child Support: Statutory And Contractual Page 13

Related Articles

Related forms

Related Categories