Academic journal article Journal of Accountancy

Service Agrees - Unmarried Parent Can Claim/waive Dependency Exemption

Academic journal article Journal of Accountancy

Service Agrees - Unmarried Parent Can Claim/waive Dependency Exemption

Article excerpt

In King, 121 TC 245 (2003), the Tax Court held that the IRC section 152(e) support test applies even if the parents were never married to one another (for background see "Who Gets the Exemption?" JofA, Jan.04, page 86). Now, the IRS has revised both a form and a publication to conform to this decision. CPAs should be aware of this important new development.

BACKGROUND

Generally under section 152(a), a parent who provides more than half of the support for a child during a tax year can claim a dependency exemption on his or her tax return ($3,100 for 2004). However, a special support test applies under section 152(e) to parents legally divorced or separated or who lived apart at all times during the last six months of the year. The child is treated as a dependent of the parent who had custody for the greater portion of the year (the custodial parent); the noncustodial parent cannot claim a dependency exemption on his of her return.

However, the custodial parent can release his or her right to claim the exemption by using Form 8332, Release of Claim to Exemption for Child of Divorced or Separated Parents, and providing it to the noncustodial parent. The release can be for the current year, a set number of years or all future years. The noncustodial parent must attach form 8332 to his or her return for each year he or she claims the exemption.

FACTS OF KING

In 1988 Monique's mother signed form 8332 to waive her right to claim a dependency exemption for her daughter for 1987 and all future tax years. …

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