As a taxpayer, you are generally entitled to a personal exemption of any of your children for whom you provide more than 50% of the support during the tax year. However, if you and the child’s other parent are divorced or separated, different rules apply. In general, in such a case, if the parents together provide more than 50% of the child’s support, then the parent who had custody of the child for the greater part of the year is entitled to the exemption for the child. This is true even if the noncustodial parent provided the greater part of the support. This rule applies where at year-end the parents are either divorced, legally separated, separated under a written separation agreement, or have been living apart at all times during the last six months of the year.
There are several ways in which you can avoid this general rule if you are the noncustodial parent, but each requires the cooperation of the custodial parent. First, the custodial parent may waive his or her right to the exemption by attaching a required form to his or her tax return each year. In that case, the noncustodial parent may claim the exemption. Second, you may enter into a multiple support agreement with the custodial parent, which can assign the exemption to the noncustodial parent. In such cases, the noncustodial parent must still provide at least 10% of the child’s support. Such agreements are useful where the parents have joint custody of the child and it is unclear who is entitled to the deduction under the regular rules. Finally, there is an exception for certain divorce and separation agreements entered into before 1985. To the extent that they assign the exemption to the noncustodial parent, they will be respected by the IRS.
Because these rules may deny the personal exemption to a noncustodial parent who is providing the major part of a child’s support, the allocation of a child’s personal exemption must be carefully considered in preparing any divorce or separation agreement.