J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

21.7 Special Rule for Divorced or Separated Parents

A special rule for divorced or separated parents allows the parent with whom the child lives for the greater part of the year (the custodial parent) to waive the exemption in favor of the other parent (the noncustodial parent). The special rule applies only if the following threshold conditions are met: (1) the child receives over one-half of his or her total support for the year from one or both parents, (2) the parents are divorced or legally separated under a decree of divorce or separate maintenance, separated under a written separation agreement, or live apart at all times during the last six months of the year (this includes parents who were never married to each other), and (3) the child is in the custody of one or both parents for more than half the year.

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Planning Reminder

Form 8332 Waiver Applies to Child Tax Credit

If a custodial parent releases the right to claim a dependency exemption for his or her child on Form 8332 (or substitute statement), the release also gives the noncustodial parent the right to claim the child tax credit and the additional child tax credit, assuming the credits are not phased out; see 25.2.

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The first condition is not met, and the special rule does not apply, if a parent and other individuals contributing more than 10% of the child’s support enter ...