In order for the non custodial parent to take the dependency deduction, it is essential to file the Form 8332 with the tax return. The Family Law Taxation blog cites a case in which the tax Court announced that this requirement will be strictly applied.
In Chamberlain v. Commissioner, the U.S. Tax Court ruled that the former husband (taxpayer) was not entitled to the dependent deduction for one of his children because he didn’t attach a valid IRS Form 8332 (Release of Claim to Exemption for Child of Divorced or Separated Parents) to his 2003 Federal tax return (the child credit was also denied because it is premised on being entitled to the dependent deduction for the child).
The taxpayer’s former wife executed a Form 8332 in which she relinquished the dependency deduction for one of their two children beginning in 1995 and for all future years. The taxpayer claimed that he attached the original Form 8332 to his 1995 return, but that a subsequent fire destroyed all of his copies. The IRS was unable to provide a copy because their 1995 tax return information had been destroyed (pursuant to IRS document destruction policies).
This result may seem harsh, but as the Court indicated, “Although we are sympathetic with [taxpayer’s] plight, we are bound by the wording of the statute as enacted and accompanying regulations when consistent therewith.
It is clear, if you are seeking to claim the dependency deduction, make sure the proper forms are filed with the tax return.