Claiming the Dependency Exemption On Your Tax Returns After A Divorce
Colorado has a law that explains how the dependency exemption for a minor child will be handled, after a divorce decree (dissolution of marriage) is entered. The law is contained in Colorado Revised Statute C.R.S. Section 14-10-115. The law says:
(12) Dependency exemptions. Unless otherwise agreed upon by the parties, the court shall allocate the right to claim dependent children for income tax purposes between the parties. These rights shall be allocated between the parties in proportion to their contributions to the costs of raising the children. A parent shall not be entitled to claim a child as a dependent if he or she has not paid all court-ordered child support for that tax year or if claiming the child as a dependent would not result in any tax benefit.
Colorado courts have interpreted this part of the law to mean that unless the parties agree otherwise, the judge or magistrate will order that the parents will be able to claim the dependency exemption on future tax returns, based on their respective gross income percentages, and not based on where the child lives, who is paying child support, who is paying for the child’s extracurricular expenses, etc. The phrase “contributions to the costs of raising the children” refers to the percentage of child support attributed to each parent in the course of making the child support computation. In re Staggs, 940 P.2d 1109 (Colo. App. 1997).
For example, let’s presume that a father and mother have 2 children, the father’s monthly gross income is $6,770 per month, and the mother’s monthly gross income is $3,330 per month. Their combined monthly gross income is $10,000.00 per month. The mother earns around 1/3 of the combined monthly gross income, and the father earns 2/3 of the combined monthly gross income. There are a few different ways a judge or magistrate might see this situation:
Option 1: The father claims both children as exemptions 2 out of every 3 years. The mother claims both children 1 out of every 3 years.
Option 2: In one year, the father claims both children. The next year, the father claims 1 child and the mother claims 1 child.
Many parents feel the Colorado dependency exemption laws are unfair. For example, a mother might feel that if the children are only with their father every other weekend, and he pays for child support on a monthly basis but won’t give the mother money for school lunches, school supplies, clothing, activities at school, etc., it is unfair for the father to be able to claim the dependency exemption. However, Colorado law is clear on how the Court has to divide the dependency exemption, even if it seems unfair to a parent.
IRS Form 8332: Release/Revocation of Release of Claim
The parent who has the children the majority of the time or a parent with equal time, might need to fill out and sign IRS Form 8332 and give it to the other parent who is claiming the child as a dependency exemption. That form can be found at www.irs.gov.
This article does not contain tax or legal advice. For tax advice, consult a tax professional. For legal advice, contact me, or an independent attorney of your choosing.