IRS Finalizes Dependent Child Custody Rules
July 15 , 2008
In early July, the IRS issued final regulations relating to custody rules for dependent children of divorced or separated parents or parents who live apart. These regulations are found in §1.52-4 of the Treasury Regulations.
The 8-page regulations clarify several terms that were in the proposed regulations that were published in May 2007. The IRS added more examples, increasing the number from seven to 20. These regulations took effect on July 2, 2008.
Here is a summary of what changed in the final regulations:
- The IRS explained that custody ends when a child reaches the age of majority under applicable state law.
- The "counting nights" rule is a tiebreaker in some situations where there is joint custody. The final rules further clarify that a child resides for a night with a parent if the child sleeps either at the parent’s residence (whether or not the parent is present), or in the company of the parent when the child does not sleep at a parent's residence (e.g., vacation). New Year's Eve counts as a night in the current tax year even though it crosses over into the next tax year.
- There is an exception to the "counting nights" rule where the custodial parent works during the night.
- A parent may release his or her right to the dependent exemption by making a written declaration. The final regulations require that the parent revoking the release notify, or make reasonable attempts to notify, in writing, the other parent of the revocation. A reasonable attempt would be to mail a copy of the revocation to the last known address by First-Class mail.
A copy of the final regulations is available at http://edocket.access.gpo.gov/2008/pdf/E8-15044.pdf.