Custody determination: who gets the dependency exemption and child tax credit?

• Author: Frumkes, Melvyn B.
• Position: Family Law

A "custodial parent" (1) for tax purposes means the parent with whom the child lived for the greater number of nights during the year. The noncustodial parent is the other parent. If the child was with each parent for an equal number of nights, the "custodial parent' is the parent with the higher adjusted gross income. This is known as the tie-breaker rule.

In the case of a child of divorced parents, if a child receives one-half of that child's support during the year from that child's parents and is in the custody of one or both for more than half of the year, then the child shall be treated as receiving over half of that child's support during the year from the parent having custody for the greater portion of the year. (2)

In the event of so-called "split" or 'joint custody" (sometimes referred to as "rotating custody"), "custody" will be deemed to be with the parent who, as between both parents, has the physical custody of the child for the greater number of nights. (3)

Greater Number of Nights

A child who is temporarily absent from a parent's home for a night would be treated as residing with the parent with whom the child would have resided for the night. However, if a child resides with neither parent for a night, for example, because another party is entitled to custody of the child for that night, the child would be treated as not residing with either parent for that night. Under the tie-breaking rule in the regulations, if a child resides with each parent for an equal number of nights during the calendar year, the parent with the higher adjusted gross income for the calendar year would be treated as the custodial parent. (4)

A child resides with a parent for the night if the child sleeps at the residence of that parent (whether or not the parent is present) or in the company of the parent when the child does not sleep at a parent's residence (for example, the parent and the child are on vacation together). (5)

Absences

A child who does not reside with a parent for a night is treated as residing with the parent with whom the child would have resided for the night but for the absence. (6)

The Internal Revenue Service gives the following example: (7)

Grandmother has the right to physical custody from January 1 through March 31, 2007. The Father and Mother have physical custody from April 1 through December 31, 2009. The child, during that period, would have the right to reside with the Father for 180 nights and with the Mother for 95 nights. However, the Father is away on military service from April 10 to June 15, 2009 and from September 6 to October 20, 2009. During these periods the child resides in the Grandmother's house. The child would have resided with the Father if the Father had not been away on military service. The Grandmother unsuccessfully claims the child as a dependent. The Father gets the exemption because the child is treated as residing with the Father for the nights the Father is away on military service.

Exception for a Parent Who Works at Night (8)

If, in a calendar year, due to a parent's nighttime work schedule, a child resides a greater number of days, but not nights, with the parent who works at night, that parent is treated as the custodial parent. On a school day, the child is treated as residing at the primary residence registered with the school.

Children Reaching Age 19

Neither parent has "custody" within the meaning of I.R.C. [section]152(e)(1) for children who have attained the age of 19. (9) For the child who has reached age 19, the dependency exemption may be taken by the parent who provides over half of that child's support if the child is a student not yet attaining the age of 24 at the close of the calendar year. (10)

"Student," pursuant to the I.R.C. (11) is defined as:

[A]n individual who during each of [five] calendar months during the calendar year in which the taxable year of the taxpayer begins--(A) is a full-time student at an educational organization described in section 170(b)(1)(A)(ii); or (B) is pursuing a full-time course of institutional on-farm training under the supervision of an accredited agent of an educational organization described in section 170(b)(1)(A)(ii) or of a [s]tate or political subdivision of a [s]tate.

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