U.S. Tax Court Trumps State Family Court

July 9, 2013Articles The Legal Intelligencer

Family law judges and lawyers beware that in assigning dependency exemption to a noncustodial parent, Form 8332 releasing the exemption must be secured from the custodial parent. In Shenk v. Commissioner of Internal Revenue, 140 T.C. 10, filed May 6, the U.S. Tax Court disallowed a noncustodial father’s dependency exemption claim because the mother’s failure to sign Form 8332, despite a state court’s divorce decree providing the dependency exemption would be divided between the parents.

Assignment of the dependency exemption is a useful tool for courts and lawyers in structuring support orders, divorce orders and, overall, effectuating equitable relief. For more than a decade, Pennsylvania courts have been specifically authorized to assign the dependency exemption. Under Pa.R.C.P. 1910. 16-2 (f), to maximize the total income available to a family, the court is permitted to award the federal child dependency tax exemption to the noncustodial parent or to either parent in a shared custody arrangement. Further under this rule, the court can require a parent to sign Form 8332.

To read the full article click here.