A Tax Court has ruled that non-custodial Father is not entitled to claim dependency exemption because custodial parent Mother failed to complete I.R.S. Form 8332 releasing the exemption and the divorce judgment, which Father attached to return, does not contain substantially same information. In the case of Thomas v. Commissioner, when Arizona resident (Father) was divorced from Mother in June of 1994, their divorce judgment awarded custody of their 3 year-old daughter to Mother; Father was awarded 30 days of visitation in summer, plus reasonable visitation in Daughter’s State of residence. Father was also ordered to pay child support of $400 per month through Arizona Trial Court. The parties’ divorce judgment further provided that Mother would claim the dependency exemption and child tax credit for tax year 1995, and succeeding odd-numbered years, while Father would claim the exemption and credit in even-numbered years, if he was current in his child-support payments. Mother was required to execute necessary forms to permit Father to claim exemption and credit, but only if Father’s child support payments were not in arrears.
In 2006, Father was not delinquent in his child support payments for Daughter, who lived with Mother in Ohio. On his 2006 federal income tax return, prepared by his CPA, Father claimed dependency exemption and child care credit, but the CPA subsequently notified him that his return was rejected from electronic filing because someone else claimed dependency exemption. The CPA then filed Father’s paper return, to which Father attached copy of the divorce judgment, but not the I.R.S. Form 8332 exemption release. I.R.S. sent a deficiency notice to Father, claiming that he was not entitled to claim either the dependency exemption or child tax credit.
Father then petitioned the U.S. Tax Court for relief, but the Tax Court has now ruled in favor of I.R.S. The Tax Court has ruled that (1) per I.R.C. §152(e), Father, as non-custodial parent, was not entitled to claim the dependency exemption unless (a) Daughter received more than half of her support from Mother and Father, (b) Mother and Father were divorced, separated, or living separate and apart for at last six months of 2006, (c) Daughter was in custody of either Mother or Father more than half of 2006, and (d) Mother, as custodial parent, released dependency exemption and Father attached the Form 8332 release or document conforming to its substance to his return ; (2) Father could meet conditions (a), (b), and (c), but not (d); (3) the divorce judgment did not qualify as conforming document because it lacked Social Security numbers for Mother and Father, Mother’s signature was not dated, and release of exemption was conditioned on Father’s being current with child support payments; (4) Father could not claim dependency exemption; and (5) Father’s being unable to claim dependency exemption meant that he was also ineligible to claim child tax credit. The Tax Court therefore has concluded that although it is sympathetic to Father’s predicament, it is bound by statutes and regulations as written.