Do court judgements over-rule the IRS?

Question

My roomate has court papers that says she claims 1 child and the father claims the other. Both of the children live with their father. His dad claimed both kids last year and this year (because the dead-beat dad has not job) completely ignoring the court papers. So do the court papers over-rule the IRS? I'm confused.

Answer 1

Maybe, maybe not.

If the court decree meets VERY specific guidelines set out in Federal law, the IRS will abide by the court order. However, if the court order does NOT meet those specific guidelines the IRS is required by law to ignore the decree and allow the exemptions according to Federal law.

Normally, the custodial parent gets the exemption. The custodial parent is defined as the parent that the children lived with for the greater part of the year. The custodial parent can surrender the exemption to the non-custodial parent in writing, either on a year by year basis or permanently.

However, since the custodial parent didn't claim the children, the non-custodial parent would win any tie-breaker with the custodial parent's father since she is a parent and he is not. This isn't strictly by the rules but I would be tempted to file a paper return and claim them keeping in mind that the IRS might not agree with your position. Both taxpayers will be required to defend their position and you'd probably win the exemption on the tie-breaker.

See IRS Pub 501 for complete information on claiming exemptions for children when the parents live apart and more than one taxpayer claims the exemptions.

Answer 2

Bad News
Unfortunately, the IRS has a retarded system that is "first come first serve" with claiming children.
Good News
The answer to your question is the court, does rule over the IRS. So, if the father/grandfather tries to claim the kids, by filing his taxes before her, then she has the right to send the IRS a letter explaining what happend, with proof from the court, stating that she gets to claim 1 child in 2006, or what ever the case may be.

It may be a bit of back and forth, and waiting forever for the IRS to reply. But they will most likey tell you exactly what documents to provide them with and then they will make the official assessment.

It may be worth it, because what they Will do is send her a letter in a few months saying, "we have changed your 2005 tax return, we will be sending you a check for $xxx." at the same time they will send the father/or in law a letter saying, we have changed your tax return, you owe $xxx. If he doesn't pay it, they will take it out of his next years money owed back to him.

Hope that helps

Answer 3

It depends on all the circumstances. Since both children live with the father, he is presumed to provide support for tax purposes. If the court ordered joint custody and if your roommate provides for support of the child, the court order as to tax dependency would be accepted by the IRS. If your roommate provides no support and the children live with the father, he will probably be awarded the deduction. She can bring it all to a head by trying to claim one of the children as a dependent.