The 2013 tax filing deadline is approaching. When parents are divorced and are now “single”, each former spouse files separate income tax returns. But what happens to the child dependency exemption? The answer: If the divorce decree does not address this issue, the tax dependency exemption goes to the “custodial parent”…the parent who is awarded sole physical custody in a Minnesota Divorce Decree. However, both parents can ask the Court to determine the issue of tax dependency exemption in the underlying divorce proceeding. By requesting that the Court make a decision as to which parent can claim the child as a tax dependency exemption, the divorce decree provides the answer and both ex-spouses must then follow their divorce decree. In some instances, the Court orders the exemption to 1 party; in other instances, the Court might order that the parents alternate the child dependency exemption (example: father gets the dependency exemption in tax year 2013 and mother gets the exemption in tax year 2014 and so on).
How does a court determine which parent can claim the dependent minor child on her/his income taxes? The Internal Revenue Code does not prevent a court from awarding the use of a dependency exemption to a particular parent, even if that parent may not have physical custody of the child. See Rogers v. Rogers, 622 N.W.2d 813, 823 (Minn. 2001). The court has the ability to award (and later modify an award) of a tax dependency exemption. See Joneja v. Joneja, 422 N.W.2d 306, 310 (Minn. Ct. App. 1988). The court is only required to consider the best interests of the minor child in determining how to award the use of the exemption, which generally means that the exemption goes to the parent who would get the most benefit from the use of the exemption (as the financial benefit realized by the parent, would presumably be passed on to the child. See Crosby v. Crosby, 587 N.W.2d 292, 298 (Minn. Ct. App. 1998). In a situation where a parent can prove that an award of the tax dependency exemption is unreasonable and unfair, such as when a parent incurs a financial hardship due to loss of income, or increased expenses, the court can modify the award of the dependency exemption. See Joneja, 422 N.W.2d at 310. The parent who is facing financial hardship due to changes in her or his circumstances, or simply wonders about the fairness of a child support or dependency exemption award, should consider a review of both the child support order and the award of the dependency exemptions, as modifications can be considered under Minnesota Child Support law. Minn. Stat. Section 518A.39.
At Clausen & Hassan, our attorneys can help you navigate the divorce process in a way suitable to your situation. Our attorneys make sure you have the full picture of what you might be entitled to – including child support, spousal maintenance, or other common divorce issues. Contact our Minnesota family law attorneys today for a free consultation about your specific situation.