[color:"red"] I think you've got problems. I quick review of the publication below tells me that despite the Divorce Decree as far as the IRS is concerned she's entitled to the exemption for your son because she wins on the test chart below and she has not filed the requisite form to GIVE you the exemption. Thus, as far as the IRS is concerned it's your problem (they don't like to get involved in civil disputes).

All is not lost. Your divorce decree allocates the exemption to YOU for 2005. Pursuant to such agreement she is supposed to give you and/or file the required form granting you the deduction. Thus you may have to have your attorney write a letter explaining the situation and requesting she give you the form and amend her return. Such letter can indicate that you will hold her responsible for any and all interest in penalties if and when such are incurred (but you won't win that cause your taxes are your taxes...you should have got the required form). If she fails to respond to the letter...you may have to fight her to enforce your divorce agreement and compel her by court order to delivery you the proper form.

This is a cursory opinion and perhaps arguable on their side based on the fact custody was not 50-50 pursuant to the agreement. They can always come up with some argument...then nobody wins but the IRS and the attorneys.

One solution is to simple amend your return, pay the tax and be more careful in 2007, '09, '11 (assuming he is a student). Further, in the 2006, 08, 10 try to get 51% or more custody of son assuming he's a student after age 19? and get your deduction back despite the agreement. In essence, shaft her back.

I think it would be better to work it out with her now.

Sorry,

Mr. Wondering

p.s.- I copied the below to show you where within Pub 504 the pertinent section is but you should go there (link below) to read and print it for your accountant and/or laywer and you to read and discuss. The tables do not show up when copying. Sorry

p.p.s.- glad I could assist you.

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Pertinent Excert from IRS Pub. 504

...

Exemptions for Dependents
You are allowed one exemption for each person you can claim as a dependent. You can claim an exemption for a dependent even if your dependent files a return.

Beginning in 2005, the term “dependent” means:

A qualifying child, or

A qualifying relative.

Table 3 shows the tests that must be met to be either a qualifying child or qualifying relative, plus the additional requirements for claiming an exemption for a dependent. For detailed information, see Publication 501.

Table 3. Overview of the Rules for Claiming an Exemption for a Dependent

Caution. This table is only an overview of the rules. For details, see Publication 501.
• You cannot claim any dependents if you, or your spouse if filing jointly, could be claimed as a dependent by another taxpayer.
• You cannot claim a married person who files a joint return as a dependent unless that joint return is only a claim for refund and there would be no tax liability for either spouse on separate returns.
• You cannot claim a person as a dependent unless that person is a U.S. citizen, U.S. resident, U.S. national, or a resident of Canada or Mexico, for some part of the year. 1
• You cannot claim a person as a dependent unless that person is your qualifying child or qualifying relative.
Tests To Be a Qualifying Child Tests To Be a Qualifying Relative
1.



2.



3.


4.


5. The child must be your son, daughter, stepchild, eligible foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them.

The child must be (a) under age 19 at the end of the year, (b) under age 24 at the end of the year and a full-time student, or (c) any age if permanently and totally disabled.

The child must have lived with you for more than half of the year. 2,3

The child must not have provided more than half of his or her own support for the year. 3

If the child meets the rules to be a qualifying child of more than one person, you must be the person entitled to claim the child as a qualifying child. 1.


2.




3.


4. The person cannot be your qualifying child or the qualifying child of anyone else.

The person either (a) must be related to you in one of the ways listed under Relatives who do not have to live with you, or (b) must live with you all year as a member of your household. 2

The person's gross income for the year must be less than $3,200. 4

You must provide more than half of the person's total support for the year. 3,5

1 Exception exists for certain adopted children.
2 Exceptions exist for temporary absences, children who were born or died during the year, children of divorced or separated parents, and kidnapped children.
3 Special rules may apply for people who were temporarily relocated because of Hurricane Katrina. For details, see Publication 4492.
4 Exception exists for persons who are disabled and have income from a sheltered workshop.
5 Exception exists for multiple support agreements. See Publication 501.




Dependent not allowed a personal exemption. If you can claim an exemption for your dependent, the dependent cannot claim his or her own exemption on his or her own tax return. This is true even if you do not claim the dependent's exemption on your return or if the exemption will be reduced or eliminated under the phaseout rule described under Phaseout of Exemptions, later.



You may be entitled to a child tax credit for each qualifying child who was under age 17 at the end of the year. For more information, see the instructions in your tax forms package.

Special Rules for Divorced or Separated Parents
In most cases, a child of divorced or separated parents will be a qualifying child (see Table 3) of one of the parents. However, if the child does not meet the requirements to be a qualifying child of either parent, the child may be a qualifying relative of one of the parents.

A child will be treated as the qualifying child or qualifying relative of his or her noncustodial parent if all of the following apply.

The parents:

Are divorced or legally separated under a decree of divorce or separate maintenance,

Are separated under a written separation agreement, or

Lived apart at all times during the last 6 months of the year.

The child received over half of his or her support for the year from the parents.

The child is in the custody of one or both parents for more than half of the year.

Either of the following applies.

A decree of divorce or separate maintenance or written separation agreement that applies to 2005 provides that the noncustodial parent can claim the child as a dependent. If your decree or agreement went into effect before 1985, the noncustodial parent must provide at least $600 for support of the child during 2005.

The custodial parent signs a written declaration that he or she will not claim the child as a dependent for 2005.




If the support of the child is determined under a multiple support agreement, this special support test for divorced or separated parents does not apply.

Custodial parent and noncustodial parent. The custodial parent is the parent with whom the child lived for the greater part of the year. The other parent is the noncustodial parent.

If the parents divorced or separated during the year and the child lived with both parents before the separation, the custodial parent is the one with whom the child lived for the greater part of the rest of the year.

Example.

Under the terms of your divorce, your child lived with you for 10 months of the year. The child lived with your former spouse for the other 2 months. You are considered the custodial parent.

Written declaration. The custodial parent must use either Form 8332 or a similar statement (containing the information required by the form) to make the written declaration to release the exemption to the noncustodial parent.

The exemption can be released for 1 year, for a number of specified years (for example, alternate years), or for all future years, as specified in the declaration.

Child support under pre-1985 agreement. All child support payments actually received from the noncustodial parent under a pre-1985 agreement are considered used for the support of the child.

Example.

Under a pre-1985 agreement, the noncustodial parent provides $1,200 for the child's support. This amount is considered support provided by the noncustodial parent even if the $1,200 was actually spent on things other than support.

Alimony. Payments to a spouse that are includible in the spouse's gross income as either alimony, separate maintenance payments, or similar payments from an estate or trust, are not treated as a payment for the support of a dependent.

Parents who never married. This special rule for divorced or separated parents also applies to parents who never married.

Special test for qualifying child of more than one person. Sometimes, a child meets the relationship, age, residency, and support tests to be a qualifying child of more than one person. Although the child is a qualifying child of each of these persons, only one person can actually treat the child as a qualifying child. To meet this special test, you must be the person who can treat the child as a qualifying child.

If you and another person have the same qualifying child, you and the other person(s) can decide which of you will treat the child as a qualifying child. That person can take all of the following tax benefits (provided the person is eligible for each benefit) based on the qualifying child.
The exemption for the child.

The child tax credit.

Head of household filing status.

The credit for child and dependent care expenses.

The earned income credit.

The other person cannot take any of these benefits based on this qualifying child. In other words, you and the other person cannot agree to divide these tax benefits between you.

If you and the other person(s) cannot agree on who will claim the child and more than one person files a return claiming the same child, the IRS will disallow all but one of the claims using the tie-breaker rule in Table 4.
Table 4. When More Than One Person Files a Return Claiming the Same Qualifying Child (Tie-Breaker Rule)

IF more than one person files a return claiming the same qualifying child and ... THEN the child will be treated as the qualifying child of the ...
only one of the persons is the child's parent, parent.
two of the persons are the child's parent and they do not file a joint return together, parent with whom the child lived for the longer period of time during the year.
two of the persons are the child's parent, they do not file a joint return together, and the child lived with each parent the same amount of time during the year, parent with the highest adjusted gross income (AGI).
none of the persons are the child's parent, person with the highest AGI.


Example 1—divorced parents.

You, your husband, and your 10-year-old son lived together until July 1, 2005, when your husband moved out of the household. In July and August, your son lived with your husband. In September and October, the boy lived with you. On November 1, 2005, you and your husband were divorced. For the rest of the year, your son lived with your ex-husband, who was given custody. Your son is a qualifying child of both you and your ex-husband because your son lived with each of you for more than half the year and because he met the relationship, age, and support tests for both of you.

You and your ex-husband may choose which of you will treat the child as a qualifying child. However, if you and he are unable to agree and both treat the child as a qualifying child, only your ex-husband will be allowed to treat him as a qualifying child. This is because, during 2005, the child lived with him longer than with you

Here is a link to the easier to read Publication in full. The tables would not copy over here so go there to read it.

[color:"blue"] IRS Publication 504 [/color]

My gawd, WAT!

What a trivial POS thing 2 do 2 you!

-ol' 2long

other points:

1. I don't know how it went down but I presuming your XW sprung this on you, after April 17, with full knowledge YOU intended to take the exemption. Hope I'm wrong but after all you've been through SHAME ON HER for giving you such grief. Why she didn't discuss this with you immediately I don't know. I bet her accountant merely said "you can take it if you want" and she did not call her divorce attorney to confirm.

2. Divorce Decrees after 1985 require the proper form to transfer the exemption to the non-custodial parent (49% parent of less). Just maybe such form WAS already signed by each of you, filed the year you divorced and still in effect OR in your attorney's file. That should of or could of been set up back then.

3. These type of questions were the only divorce law type questions which I did actually perform (when I was with a firm). Divorce Attorneys routinely MESS up the tax ramnifications of their settlement agreements. You are at least fortuante enough to be addressing this issue NOW. If your XW had not discussed this with you today, you likely would be MUCH more screwed 3 years from now when the IRS sends you a line audit letter, makes a determination that YOU OWE THEM and tacks on interest and penalties. It could have been worse, really.

Mr. Wondering

Thanks Mr. W - I didn't read in detail yet what you provided above, but I did find that very same publication a few months ago, read it in detail then, and concluded that because we have an order that specifies that odd years are mine and even years are hers to claim the child, that that overrides any other criteria. I'll try to retrace that logic.

Thanks,
WAT

I think your logic likely is too focused on your rights to take the exemption instead of your wife pursuant to the agreement versus your rights under the code to take the deduction. The agreement sounds clear...you get it. Thus she shouldn't take it.

Problem is, she did. The IRS doesn't care what your agreement with XW says absent the filing of the proper form from the custodial parent to the non-custodial parent you lose. They will line audit the both of you and based upon my reading of that Publication they will very likely give her the exemption leaving you stuck with the full bill.

So you lose to IRS. You pay IRS. You then attempt to enforce your apparently very legitimate right to the exemption directly from her. So you sue her?. Doubtful, just not enough money at stake.

Just maybe you could "compel" her to amend her return now via an action in the family court pursuant to the divorce decree. You would be requesting that XW be compelled to deliver you the exemption, via the proper IRS form and that she amend her return. That you should/could win.

But no matter what...don't sit on it, expecting to shaft her later. I think the penalties and interest would be your fault and you'd likely not win them later. Not to mention the time involved.

Again, only a cursory review. The full and complete treasury regulations may include exceptions or I just may be mistaken.

Good luck,
Mr. W

From Pub 501

A child will be treated as being the qualifying relative of his or her noncustodial parent if all of the following apply.

1. The parents:
a. Are divorced or legally separated under a decree of divorce or separate maintenance,

[color:"red"]check[/color]

b. Are separated under a written separation agreement, or
c. Lived apart at all times during the last 6 months of the year.

[color:"red"]check[/color]

2. The child received over half of his or her support for the year from the parents.

[color:"red"]check[/color]

3. The child is in the custody of one or both parents for more than half of the year.

[color:"red"]check[/color]

4. A decree of divorce or separate maintenance or written separation agreement that applies to 2005 provides that the noncustodial parent can claim the child as a dependent.....OR the custodial parent signs a written declaration that he or she will not claim the child as a dependent for the year.

[color:"red"]check[/color]

W - is this the same as you quoted above? Maybe it is.

Our decree is very clear. I get odd years, she gets even years.

Am I missing something?

WAT

<img src="/ubbt/images/graemlins/confused.gif" alt="" /> <img src="/ubbt/images/graemlins/confused.gif" alt="" />

Then why have the condition for what the decree of divorce says - by Order?

WAT

You are missing something.


This provision only make you eligible to take the exemption. You both are eligible. This provision is designed to keep you from giving say me the exemption.
The agreement makes you "qualified" but it doesn't give you the right to take it without following the rest of the rules (i.e.- she must either voluntarily or by complusion file or provide you with that proper form). Once you have the form, whether she amends her return or not is her problem though you'll likely BOTH be line audited.

W

OK, thanks again. I follow you.

Why doesn't the OR apply?

Order OR custodial parent signs a written declaration....

"4. A decree of divorce or separate maintenance or written separation agreement that applies to 2005 provides that the noncustodial parent can claim the child as a dependent.....OR the custodial parent signs a written declaration that he or she will not claim the child as a dependent for the year."

Order or agreement. We have an Order.

If the OR was an AND, your argument would hold.

Caveat: I am not an attorney, but I did stay in a Holiday Inn Express recently.

??

WAT

lol.

All that provision does is make you, the noncustodial parent (which fact I have presumed from your question and could be arguable), eligible to take the exemption. No where does it state that she is ineligible to take it too. She the custodial parent in your fact pattern, she is the one that is supposed to get it. You are merely allowed to take it if you follow the rules, which include the required filing of the "transer of exemption form".

Since your both eligible and you both took it you then have to go to the test table 4. She wins cause son lived with her longer in 2005, you lose where the IRS is concerned only.

W