United States Tax Court has ruled that although a divorce judgment entitled Father to claim dependency exemptions for his two children, he may not do so because Mother refused to sign I.R.S. Form 8332 Release of Exemptions. In the case of Nixon v. Commissioner, Washington State resident, Father, was divorced from his wife in 2002. Their divorce judgment provided that Mother would be the custodial parent of their minor children and Father would pay child support for the children. It further provided that Father would be entitled to claim federal income tax exemptions for one child every year and for the other child in odd-numbered years if he was current in his child support payments. It also required both parents to sign federal income tax dependency waivers. Father was current in his child support payments during 2007. When he filed his federal income tax return for the tax year 2007, he claimed both dependency exemptions for the two children, along with the child tax credits. He attached I.R.S. Form 8332 to his return, along with copies of three letters to the I.R.S., stating that Mother had refused to sign the I.R.S. Form 8332 and that she had claimed dependency exemptions on her 2007 return, in violation of the provisions of their divorce Judgment.
Unmoved, the I.R.S. disallowed Fathers dependency exemptions and his child tax credits. Father petitioned the U.S. Tax Court for relief, but the Tax Court has now ruled in favor of I.R.S. In its ruling, the Tax Court has found that (1) the children are not Fathers qualifying children because they did not live with him for more than one-half of the tax year 2007; (2) the children are not Fathers qualifying relatives because Father failed to show that he provided more than one-half of their support or that they were not the qualifying children of another taxpayer (for example, Mother); (3) Mother refused to sign I.R.S. Form 8332 or its written equivalent; (4) Father may not claim dependency exemptions for children because they are not his qualifying children or qualifying relatives and Mother, as custodial parent, has not released exemptions; and (5) Father may not claim child tax credits for children because they are not his qualifying children. Tax Court expresses sympathy for Fathers position and acknowledges that stringent I.R.S. rules work hardship on deserving taxpayer such as Father. However, Tax Court concludes that it is bound by those rules and statutes to enter decision for I.R.S.
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