Exemption for a Child
Generally, the custodial parent is the one that is entitled to deduct the exemption for a child unless the custodial parent releases the exemption. The release (IRS provides form 8332 for this purpose) must be a written declaration, and it must be unconditional (no strings attached, such as requiring the non-custodial parent to meet support payment obligations). If both parents were to claim the children as dependents, the IRS’s computer matching program is designed to flag both of the parent's returns, and send each a notice requiring substantiation for the claim. The IRS would assess additional tax, as well as penalties and interest, if the facts do not support the parent as the one entitled to the exemption.