Taxes & Divorce: Support Requirements for Dependents:
The support test is based upon the amount of support and not upon the period of time over which it is given unlike the tests for head of household in the costs of maintaining the principal place of abode. It includes the fair market value of goods or property used for support. Reg. Sec. 1.152-1(a)(i) lists the following examples of items constituting support:
- Food and clothing
- Lodging (caution, see below)
- Medical, dental care
- Education
- Life insurance premiums (paid by custodial parent on the life of the non-custodial parent with children as beneficiaries)
- Property, gifts
- The cost of services rendered by others, but not the value of services rendered by the taxpayer
- Rental value of furnishings
- Welfare benefits, life insurance proceeds, and other non-taxable income
The Internal Revenue Service maintains that support is based upon actual contributions each spouse actually makes. "All child support payments actually received from the noncustodial parent are considered used for the support of the child" (IRS Publication 501) A similar statement appears in IRS Publication 504 under the heading “Agreements made before 1985.” The source of this statement originated in Rev. Rul. 71-43 (1971-1 Cum. Bul. 44). The ruling was referring to old Section 152(e)(2) whereby a noncustodial parent who paid at least $1200 of support for a child could claim the dependency exemption, even if not awarded the exemption, provided that the custodial parent could not clearly demonstrate that the custodial parent provided $1200 or more support. This section in the code was repealed for all agreements and exemptions in 1985. Reg. Sec. 1.152-4(d)(4) still states "For purposes of this paragraph (i.e., exceptions when the noncustodial parent is given the exemption provided the noncustodial parent pays at least $600 of support for the child), amounts expended for the support of a child shall be treated as received from the noncustodial parent to the extent that the noncustodial parent provided amounts for the support of the child, whether or not such amounts provided by the noncustodial parent are actually expended for the child support." This obviously contradicts other positions of the IRS regarding lodging as support, discussed immediately below.
Where there is joint ownership of the home that is the principal place of abode of the child before
separation, the Service states, "If the person lives with you in a home that is jointly owned by you and your spouse or former spouse, and each of you has the right to use and live in the home, each of you is
considered to provide half of the person's lodging. However, if your decree of divorce gives only you the right to use and live in the home, you are considered to provide the person's entire lodging. This is true even though legal title to the home remains in the names of both you and your former spouse" (Publication 504 (1998), page 7). The publication does not address the situation of when their residence is leased or rented.
However, the Tax Court in Correale, clearly states that when the special support tests for divorced or
separated parents under Section 152(e) does not apply, general support tests of section 152(a) apply. That is, the taxpayer must provide over the support of the child (and satisfy the other requirements discussed under Dependents) to claim the dependency exemption. Actual payments by the spouse determined the support furnished, ignoring the form of home ownership or the use and occupancy rights of the spouses.
| |
|
