In Luis Santana and Flor E. Vargas v. Commissioner, T.C. Memo 2012-49, the Tax Court upheld an IRS disallowance of a claimed dependency exemption for the tax year 2008 because the taxpayer Luis Santana (Luis) did not comply with the simple IRC requirements for allowing a non-custodian parent to claim a personal exemption for a qualifying child. 

Luis was formerly married to another (former wife).  There were two children of the marriage.  They were divorced in 2001 and entered into a family mediation unit agreement (Marital Settlement Agreement or MSA).  One child had reached majority but the other child resided with the former wife throughout 2008.  Under the MSA:

  • The former wife was designated as the primary residential parent.
  • The former spouses were to alternate claiming the younger child as a dependant after the older child reached majority provided Luis was current in child support payments, which he was for every year.
  • The MSA did not state who was to claim the child in the first year, but:
    • The former wife in fact claimed the child in every odd-numbered year.
    • Luis in fact claimed the child in every even-numbered year.

Luis did not obtain or attach to his return Form 8332, Release of Claim to Exemption for child of Divorced or Separated Parents, or any written declaration containing the same information.  Luis did not present evidence at trial to establish that the child resided with him for more than half the year or that he’d provided more than one-half of the child’s support.

Generally, under Section 152 only the designated custodial parent, with whom the child resides for more than one-half of the year, may claim the dependency exemption for an otherwise qualifying child.  IRC Section 152(e)(1) provides a special rule that allows divorcing spouses to designate who shall claim the dependency exemption deduction despite custody or residence.

To transfer the dependency exemption to the noncustodial parent, the custodial parent must execute and deliver to the non-custodial parent a properly completed Form 8332 or declaration containing the information required on the Form 8332.  The completed and signed form is then attached by the non-custodial parent to his or her return.  Luis did not attach Form 8332 or a complying declaration to his return and accordingly the court upheld the IRS denial of his claimed exemption.

What necessary information is required on Form 8332?

  • The name of the child.
  • The name and Social Security number of the noncustodial parent claiming the dependency exemption deduction.
  • The Social Security number of the custodial parent.
  • A declaration that the custodial parent will not claim the dependency exemption deduction.
  • The years for which the claims are released, and,
  • The signature of the custodial parent.

The court noted that had the MSA included all of the Form 8332 required information, Luis could have attached the MSA to his return to satisfy the requirements of Sec. 152(e). 


  • Put it in the Marital Settlement Agreement.  Had Luis’ MSA recited the information required on Form 8332, Luis could have attached the MSA to his return and the dependency exemption deduction would have been allowed. 
  • It seems a no-brainer to do the following in every case:
    • Include the Form 8332 information and declaration in the MSA.
    • Have a Form 8332 completed and signed at the same time the MSA is signed.  Don’t wait to obtain it later on.

Following this simple practice will obviate the need of the noncustodial parent having to go back into the divorce court to obtain an order to compel the custodial parent to sign Form 8332 or have the exemption disallowed as did Luis.

© 2012 by Robert S. Steinberg, Esquire
All rights reserved

This entry was posted in DIVORCE, TAX and tagged , , , , , . Bookmark the permalink.


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