Let me try to make this clear once again: The “special IRS rule for children of divorced or separated parents” does NOT apply to situations in which the child is NOT in the “custody” of one or both parents for more the half of the tax year.
To be more specific: For a child who, for more than one-half of the year, is in the custody of one or both divorced or legally separated parents, who live apart at all times during the last six months of the year and who together provide over one-half the child’s total support during the calendar year, the parent having “custody” (as defined by IRS law) for the greater portion of the year is deemed as the child’s “custodial parent” and on that basis will generally have the exclusive right to claim the dependent child tax exemption. This rule also applies to married parents who live apart at all times during the last six months of the year, as well as to never-married parents who live apart at all times during the last six months of the year, so long as such parents together provide over one-half the child’s total support during the calendar year. If this “special rule” applies, the parent having custody for the greater portion of the year is treated as the child’s “custodial parent” and n that basis will generally have the exclusive right to claim the dependent child tax exemption. However, in such case, the custodial parent may waive and release the right to claim the exemption, pursuant to procedures spelled out in the applicable law and federal regulations, thereby allowing the exemption to be claimed by the parent who had custody for the lesser portion of the year, i.e., the “noncustodial parent.”
HOWEVER, the concept of “custody” for purposes of the application of the “special IRS rule for children of divorced or separated parents” does NOT apply to a child who is “emancipated” under the law of the state in which the child resides. In most states, a child is “emancipated” automatically, by operation of law, upon attaining age 18. From the time forward, the child is NOT in the “custody” of either parent. In sum, there is no longer a “custodial” parent nor a “noncustodial” parent. The special IRS dependent child tax rule based on which parent has “custody” (and which parent is the “custodial parent”) simply DOES NOT APPLY. No need to “count the nights,” etc.
In your case, for the tax year 2009, the child was not emancipated until attaining age 18 in September 2009. Therefore, the special IRS rule for claiming the dependent child tax exemption for divorced and separated parents DOES apply for the year 2009. Which parent under this rule is entitled to claim the tax exemption for the child depends on which parent was the “custodial parent” for the greater portion of time up to the child’s attaining age 18 in Sept 2009. This is determined by the number of overnights the child spent with each parent prior to the child’s attaining age 18. For IRS purposes, the particular parent with whom the child spent the greater number of overnights from Jan 1, 2009, to the 18th birthday in Sept 2009 will be treated as the “custodial parent” for 2009.
For 2010, the special IRS dependent child tax rule based on which parent has “custody” (and which parent is the “custodial parent”) will NOT apply. Simply put, the child is NOT in the custody of either parent. The entire legal concept of “custody” simply DOES NOT APPLY. No need to “count the nights,” etc. And the use of IRS Form 8332 has no function or purpose. Further, which parent historically was or was not the custodial parent has absolutely no bearing or relevance.
For the year 2010, you can claim the child (now an adult and in nobody’s custody) as your dependent if the child qualifies as your “QUALIFYING CHILD” under the applicable IRS rules. And if the person so qualifies, you can claim the dependent exemption (and there is no need to deal with IRS Form 8332).
To be a “QUALIFYING CHILD,” there are six tests that must be met. The six tests are:
- Relationship test;
- Age test;
- Residency test;
- Support test;
- Joint return test; and
- Special test for qualifying child of more than one person.
The age test in your case will be satisfied if the child at the end of the year is under age 24 AND a full-time student.
The “support test” for “qualifying child” purposes is met if the child does not provide more than half of his/her own support.
The residency test in your case will be satisfied if the child lived with you for more than half of the year. From the facts you are presenting, it would appear that this test will NOT be met for you for 2010.
So for the year 2010, the child will not be your “qualifying child.” Rather, it appears that the child will be the “qualifying child” of your ex-wife, assuming she satisfies each of the six applicable “tests.” And if that is the case, she gets to claim the exemption (and you do not).
Further, since the “special rule for children of divorced or separated parents” does NOT apply in your case for 2010 (and subsequent years), since the child is emancipated, your ex-wife’s right to claim the dependent exemption based on the child being her “qualifying child” is absolute and not subject to being transferred to your. Again, in this situation, IRS Form 8332 has no application.
NOTE: As a practical matter, if the child qualifies as the “qualifying child” for your ex-wife (and thereby does not qualify as a “qualifying child” for you), you would nonetheless be safe in claiming the exemption on your tax return if your ex-wife opts to not claim the exemption on her tax return. No IRS form 8332 is needed. Just the informal agreement of the two of you, coupled with your ex-wife keeping her end of the agreement. As a practical matter, so long as the exemption is claimed by only ONE taxpayer (and not by more than one), IRS really does not care and will not question the exemption claim.
OK. I hope this clarifies. Time for you to click the ACCEPT button (if not already done) so I can get paid for the information given and time expended in responding to your inquiry.