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Tax Court: Father not entitled to tax exemptions for kids

By: CORREY E STEPHENSON//November 1, 2011//

Tax Court: Father not entitled to tax exemptions for kids

By: CORREY E STEPHENSON//November 1, 2011//

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Despite the terms of a couple’s divorce agreement granting a father the right to claim tax exemptions for his children, because the children spent more than half of the year living with their mother the father is not entitled to the deductions, the U.S. Tax Court has ruled.

A couple agreed that the father could claim one of their two minor children for a dependency exemption and a child tax credit if he was current on his child support payments. He could also claim their second child on odd years.

But because the mother was the custodial parent and both children lived with her more than half of the year, the Internal Revenue Service denied the father’s tax exemptions.

He appealed, pointing to the terms of his divorce agreement, but the court upheld the denial.

Under the Internal Revenue Code, an “individual must have the same principal place of abode as the taxpayer for more than one-half of the year. … Therefore, [the children] are not the qualifying children of [the husband],” the court said.

Further, “[the father] did not substantiate that he provided over one-half of [the children’s] support from all sources. … [He] also failed to establish that [the children] were not the qualifying children of any other taxpayer, e.g., [his ex-wife],” the court said.

Although the Internal Revenue Code contains a special rule under which a noncustodial parent may be entitled to child tax exemptions despite the residency requirements, it requires that the custodial parent not claim the child as a dependent and sign a declaration.

Because the wife failed to sign the requisite form – and declared the two children as her dependents – the father failed to meet the requirements for the special rule, the court said.

U.S. Tax Court. Nixon v. Commissioner, No. 2011-249. Oct. 25, 2011. Lawyers USA No. 993-3307.


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