The simple answer to this question is that the Utah parent who is awarded primary physical custody, referred to as the custodial parent, has the right to claim the children on his or her tax returns. However, an exception to this rule allows the non-custodial parent to claim one or more of the children on his or her tax returns after the divorce. Certain requirements must be met in order for this to occur.
First, the parties must be divorced by Dec. 31 or living apart for the latter half of the year. The child must be in the custody of one or both parents for at least six months of the year. In addition, more than half of the child’s financial support must come from one or both parents.
If these qualifications are met, then the custodial parent will need to fill out IRS Form 8332, which the non-custodial parent will need to make sure is attached to that year’s tax return. Of course, this also means that the custodial parent will be unable to claim that child or children since, only one parent can claim the exemption. For 2016, the dependency exemption deduction is $4,050. When that is added to the $1,000 child tax credit, it could be helpful to the a parent. Other tax benefits are available to both parents, but there are some tax breaks that are only available to the custodial parent.
When Utah parents are negotiating their divorce settlement, this is an issue that needs to be addressed. Regardless of the agreement the parties make, it will need to be explicitly outlined in the settlement in order to avoid any confusion. Furthermore, having it in the agreement allows the non-custodial parent to enforce the provision if necessary.
Source: MarketWatch, “After the divorce: Which parent gets child-related tax breaks?“, Bill Bischoff, May 13, 2016