Child tax exemption and Michigan law.

Child tax exemption rules

child tax credit

Child tax exemptions

The rules for claiming a child tax exemption are complex.  Add a divorce or custody determination to the mix and the rules for claiming a child tax exemption can give even a seasoned tax professional a headache.  

The first rule is that the child must be your qualifying child.  

Test for a qualifying child tax exemption?

  1. The child must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them.
  2. The child must be (a) under age 19 at the end of the year and younger than you, and (b) under age 24 at the end of the year, a student, and younger then you, or (c) any age if permanently and totally disabled.
  3. The child must have lived with you for more than half of the year.
  4. The child must not provided more than half of his or her own support for the year.
  5. The child must not be filing a joint return for the year.

Child tax exemption and divorce

Only one person can actually treat the child as a qualifying child.

  • Only one person can take the tax exemption for a child;
  • Only one person can take the child tax credit;
  • Only one person can take credit for child and dependent care expenses; and
  • Only one person can exclude from income dependent care benefits.

In simple terms, the custodial parent (parent who spends the majority of the time with the child is awarded the child tax credits under the IRS rules which can be found in IRS publication 501 and http://www.irs.gov/pub/irs-pdf/f8332.pdf.

Michigan courts can award a parent the child tax credit even if it is contrary to the IRS rules.

While Michigan Court’s cannot change the IRS rules regarding a child tax credit, they can enter an Order awarding the child tax credit to a parent who might not qualify under the IRS rules set forth above.  The Michigan Court’s accomplish this by ordering a party to complete IRS Form 8332 which operates as a Release / Revocation of Release of Claim to Exemption for Child by the Custodial Parent.  In simple terms, the Michigan court can order the parent whose child qualifies for a child tax exemption to release the exemption so the other parent can claim the child tax credit.

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By:  Daniel Findling

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