IRS Rules that Parents Must Prove Support

December 10, 2009

By Jennifer Moore, Family Law Attorney

A Surprising New Ruling by IRS Regarding Child Support

Recently, the Seattle Times reported that the IRS determined that a single mother of two who worked as a hairdresser could not claim her children as dependents on her tax return, because she could not prove that she provided over 50% of their children’s support. This is a surprising result, since, in this case, it leads to the anomaly that no one can claim these children as dependents.

Tax Law, Child Custody, and Tax Planning

Although I am not a tax lawyer, as a family law attorney, I am often asked to help my clients allocate the dependency exemptions fairly. Parents are able to trade dependency exemptions back and forth quite liberally, regardless of who provides the most support, or who the children live with most of the time. The default is that the parent who has custody most of the time is entitled to the dependency exemption. However, tax planning often dictates that the other parent will get the most use of the dependency exemption. Often, families simply want to divide the tax benefit by alternating the dependency exemptions.

Apparently, however, if the hairdresser’s case is taken as new law, low-income tax payers will need to maintain records as to how much they’ve expended on support for their children. See the IRS Guidelines for more information.

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