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GGD-94-200R 1 (1994-08-31)

handle is hein.gao/gaobackqo0001 and id is 1 raw text is: lJz'Lfj United States GA n General Accounting Office Washington, D.C. 20548 General Government Division B-258224 August 31, 1994 The Honorable William J. Coyne House of Representatives Dear Mr. Coyne: Your July 6, 1994, letter asked us to provide suggestions on how the current provisions of section 152 of the Internal Revenue Code, which deals with the dependent exemption, could be improved. Your specific concern was with section 152(e)(2), which deals with circumstances in which noncustodial parents can claim the child dependent exemption. When parents are divorced or separated, only one can claim the dependent exemption. The exemption amount is $2,450 in 1994. Since 1985 the custodial parent has generally been allowed to claim the dependent exemption irrespective of the amount of support provided. The noncustodial parent may claim the exemption if either the custodial parent releases the right to claim the exemption to the noncustodial parent, or a pre-1985 divorce decree or written separation agreement unconditionally states that the noncustodial parent can claim the child as a dependent and the noncustodial parent provided at least $600 support in that year. Thus, the noncustodial parent must bargain with the custodial parent for a transfer of the exemption. Prior to 1985, noncustodial parents could claim the dependent exemption if they paid $1,200 or more for the support of a child and the custodial parent did not clearly establish that he or she provided more support than the noncustodial parent. When disputes arose as to who was entitled to the exemption, the Internal Revenue Service (IRS) had to determine which parent was entitled to the exemption. To relieve IRS of the administrative burden of dealing with these disputes and to provide more certainty as to who could claim the exemption, Congress changed the law by allowing the custodial parent the exemption unless that spouse waived the exemption. GAO/GGD-94-200R, Dependent Exemption

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