Each year, many married parents of minor children decide to end their marriages. In these divorce cases, one issue of considerable value to a parent who will not have primary custody is the entitlement to claim at least one child as a dependent on his/her taxes. However, as the recent case of Vokovan v. Commissioner highlights, achieving this result is not as simple as a mere “handshake” agreement between divorcing spouses, or even placing it in a judicial divorce decree.
Paul Vokovan and his wife Jennifer married in 1990, and divorced a decade later. During the marriage, they had a daughter and a son. When the couple divorced, the decree awarded joint legal custody, but named Jennifer as the primary physical custodian and ordered Paul to pay child support.
The couple allegedly signed a written agreement permitting the father to claim one child as a dependent on his federal income taxes starting in tax year 2000. In 2008, the father claimed a $3,500 dependency exemption and a $1,000 child tax credit related to the son. The mother, however, claimed dependency exemptions for both children. The Internal Revenue Service rejected the father’s exemption and credit.
The father contested this determination of deficiency in the U.S. Tax Court, but to no avail. The court concluded that neither of the children were a “qualifying child” of the father, so he could not take the exemption or the credit. Generally, a qualifying child must live with the taxpayer for more than half of the tax year in question. A child may still qualify, even if he/she does not live with a parent, if the custodial parent agrees in writing that he/she will not claim that child as a dependent. The non-custodial parent must submit this agreement either on Form 8332 or another written document “conforming to the substance of that form.”
In Vokovan’s case, although he and his wife allegedly had such an agreement, he did not attach Form 8332, or any similar writing, to his 2008 return. The taxpayer alleged that he attached a Form 8332 to his 2000 taxes, but could not locate that return or that supporting form. The court explained that, even had the taxpayer located the form, it would not change the outcome of his case. If the taxpayer did not attach the form in 2008, then he did not satisfy the rule for that year and ” the prior existence of a Form 8332 is immaterial,” the court stated. The taxpayer “needed to attach a copy of a signed Form 8332, or a statement conforming to the substance of Form 8332, every year to his tax return or he is not entitled to the exemption deduction.” The court also rejected Vokovan’s contention that his divorce decree entitled him to take the deduction. The court noted that the taxpayer’s final decree of divorce did not discuss child dependency deductions. Additionally, even if it had, it was insufficient to make either of Vokovan’s children a qualifying child to him. A sufficient writing must contain the signatures of both spouses. Since neither Vokovan nor his ex-wife signed the decree, it did not meet this standard.
Income taxes, including exemptions and credits, can become even more complicated when you are a divorced parent with minor children. You may have many items to consider, including child dependency exemptions, child tax credits or alimony deductions. To ensure you properly complete your taxes , consult the experienced tax attorneys at Samuel C. Berger, P.C. and CPAs at S.C. Berger, P.C., who have years of experience helping taxpayers throughout New York and New Jersey. To consult our attorneys and CPAs, contact us online or call (201) 587-1500 or (212) 380-8117.
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