Income Tax Exemption is Generally Awarded to the Custodial Parent

A parent can claim the dependency exemption for a child if the child lived with the parent for more than one-half of the tax year. IRC 152(c)(1)(B) As a result, unless there is an agreement or court order otherwise, the parent with primary placement is entitled to the income tax exemption. The custodial parent is the person having placement of the child for the greater portion of the year. This distinction is imperative to identify in a shared custody placement arrangement where placement is on a 50/50 basis. In the event a child spends the exact same number of nights with each parent, the parent with the highest adjusted gross income is entitled to the exemption. IRC 152(4)(B)(ii)

A parent with primary placement can waive his or her rights to getting the child as an exemption and provide the right to the other parent. This waiver requires execution of IRS Form 8332, which must be attached to the non-custodial parent’s income tax return. If there is a dispute relative to allocation of the income tax exemption, resolution is generally through the divorce or paternity court–not the IRS. It is good planning in your divorce or paternity judgment to provide that neither party can revoke an exemption waiver prior to filing taxes, which include the revocation, without prior court order.