Dependent Exemptions

Dependent Exemptions

Who can claim for income tax purposes?

Many clients are confused regarding how dependency exemptions may be claimed for income tax purposes. Custodial parents often assume they can claim the exemption, while parents who pay child support believe they are entitled to the exemption. Federal law states that the custodial parent is entitled to claim the dependency exemption unless the custodial parent has signed a written statement that he or she will not claim the exemption. In other words, if your divorce or custody Judgment is silent on the issue, the custodial parent is automatically entitled to claim the exemption because there is no signed waiver. However, many Judgments incorporate settlement agreements that assign the exemption in some (or all) years to the non-custodial parent, and this is proper and acceptable for the IRS.

Can Illinois courts order a custodial parent to sign a declaration that they will not claim the exemption, and thus effectively assign it to the non-custodial parent? Yes. This issue has been addressed by our courts, and Judges in Illinois do have this authority to order a parent to sign the assignment.
The dependency exemption is often raised in settlement negotiations. How much is it worth to each party? That, of course, depends. One way to determine its value in “hard numbers” is to ask your accountant or attorney (if the attorney has the right tax software program) to calculate the value for each party based upon their respective incomes.

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