E Is For Exemption: Who Gets It?

April 15th is bearing down on us, and as divorced and separated parents get ready to file tax returns, the question of the dependency exemptions comes up. According to IRS rules, only one taxpayer may claim a dependency exemption for a child for a tax year. Two parents cannot split this dependency exemption.

Generally, the child is the qualifying child of the custodial parent. In other words, the parent who cares for the child and has the child over 50% of the time is entitled to claim a child as a dependent on his or her tax return as a matter of right.

The practical answer, however, is that the dependency exemption is a typically the subject of negotiations, particularly if there is more than one child. Many times, as long as the non-custodial parent is paying child support, the exemption is split between children, or if there is only one child, alternated year to year.