Can a divorced parent claim his child as a dependent on his New Mexico return when the child lives with him far less than half the year and no court order gives him the exemption?

Plain-English summary

A father could not claim his child as a dependent on his New Mexico return because the child lived with him only about 52 days in 2019 and no court order or signed release gave him the exemption.

Pedro Ramirez claimed one of his children as a dependent on his 2019 personal income tax return. On April 7, 2020, the Department issued a return adjustment notice reducing his refund because it disallowed that dependent. Ramirez protested.

New Mexico ties its dependent rules to federal law. To claim a child as a dependent, five tests must be met (26 U.S.C. § 152): the child is the taxpayer's child, lives with the taxpayer for more than half the year, is under the age limit, does not provide more than half of their own support, and did not file a joint return. The Department conceded Ramirez met four of the five. The one he failed was the residency test.

From the divorce court's orders, the Department calculated that Ramirez had the children for roughly 52 days in 2019—about two days every other weekend, later modified to limited weekly time. That is far short of "more than one-half" of the year, and Ramirez offered no evidence that the children lived with him longer.

There are two ways a parent in Ramirez's position can still claim the child, and neither applied:

• A signed release from the custodial parent. A noncustodial parent may claim the child if the custodial parent signs a written declaration not to claim the child and the noncustodial parent attaches it to the return. There was no such release.
• A court order granting the exemption. The Department said it would honor a court order that let Ramirez claim the child. Given the chance at the hearing to point to such a provision, Ramirez admitted the orders in the record contained none. He speculated it was in an earlier, unproduced order, but the hearing officer was not persuaded—the documents showed the exemption was a contested, unresolved issue between the parents, who had even asked the IRS to sort out a competing claim.

Because Ramirez did not meet the residency test and had neither a signed release nor a court order awarding him the exemption, he failed to carry his burden.

Result: protest DENIED; the disallowance of the dependent exemption stands.

What this means for you

The residency test is usually decisive for separated parents

For most divorced or separated parents, the child is a "qualifying child" of whichever parent the child lives with for more than half the year. Weekend and holiday time rarely adds up to half the year. Count the nights before assuming you can claim the exemption.

Get the release in writing—on the IRS form—every year you claim

If you are the parent the child lives with less than half the year, you generally cannot claim the child unless the other parent signs a written release (IRS Form 8332 or its equivalent) that you attach to your return. A verbal understanding is not enough.

A divorce decree helps only if it actually awards the exemption

The Department will honor a court order that grants you the exemption—but the order has to say so. A decree that is silent, or that leaves the issue "to be resolved," does not entitle you to claim the child. Read the order, and if it does not clearly assign the exemption, fix that before filing.

You carry the burden of proof

The taxpayer must clearly establish the right to an exemption. Vague testimony that a provision "must have been" in some earlier order will not overcome the Department's adjustment; bring the specific documents.

Common questions

Q: How many of the five dependency tests did the father meet?
A: Four of five. The Department agreed he met all but the residency test.

Q: How much time did the child spend with him?
A: About 52 days in 2019—roughly two days every other weekend under the custody orders, later limited further.

Q: Could a signed release have changed the outcome?
A: Yes. A written release from the custodial parent, attached to his return, would have let him claim the child—but none was provided.

Q: Didn't a court order give him the exemption?
A: No. He admitted the orders in the record did not grant him the right to claim the child; the issue was contested and unresolved between the parents.

Q: Would the Department follow a court order awarding the exemption?
A: Yes. The Department testified it honors a court order that allows a parent to claim a child—there simply was not one here.

Citations and references

Statutes:

• 26 U.S.C. § 151 — exemptions for dependents
• 26 U.S.C. § 152 — definition of dependent, the more-than-half-the-year residency test, and the noncustodial-parent written release
• NMSA 1978, § 7-2-2(N) — net income excludes exemptions claimed under the Internal Revenue Code
• NMSA 1978, § 7-2-3 — personal income tax on residents
• NMSA 1978, § 7-2-39 (2019) — a dependent is defined by the Internal Revenue Code
• NMSA 1978, § 7-1B-8 (2019) — 90-day hearing requirement

Cases:

• Public Service Co. v. N.M. Taxation and Revenue Dep't, 2007-NMCA-050 — the taxpayer bears the burden to prove entitlement to an exemption
• Sec. Escrow Corp. v. State Taxation and Revenue Dep't, 1988-NMCA-068 — exemptions are construed strictly in favor of the taxing authority
• Wing Pawn Shop v. Taxation and Revenue Dep't, 1991-NMCA-024 — same strict-construction rule

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Pedro Ramirez
• Decision PDF: D&O 21-02

Original ruling text

1 STATE OF NEW MEXICO
2 ADMINISTRATIVE HEARINGS OFFICE
3 TAX ADMINISTRATION ACT

4 IN THE MATTER OF THE PROTEST OF
5 PEDRO RAMIREZ
6 TO THE RETURN ADJUSTMENT NOTICE
7 ISSUED UNDER LETTER ID NO. L1868662448

8 v. AHO No. 20.11-134R, D&O No. 21-02

9 NEW MEXICO TAXATION AND REVENUE DEPARTMENT

10 DECISION AND ORDER

11 On January 14, 2021, Hearing Officer Dee Dee Hoxie, Esq. conducted a videoconference

12 hearing on the merits of the protest to the return adjustment notice. The Taxation and Revenue

13 Department (Department) was represented by Kenneth Fladager, Staff Attorney, who appeared by

14 videoconference. Alma Tapia, Auditor, also appeared by videoconference for the Department.

15 Pedro Ramirez (Taxpayer) appeared by videoconference and represented himself. The Taxpayer

16 and Ms. Tapia testified. The Hearing Officer took notice of all documents in the administrative

17 file. No exhibits were submitted.

18 The main issue to be decided is whether the Taxpayer may claim his child as a

19 dependent. The Hearing Officer considered all of the evidence and arguments presented by both

20 parties. The Hearing Officer finds in favor of the Department. IT IS DECIDED AND

21 ORDERED AS FOLLOWS:

22 FINDINGS OF FACT

23 1. On April 7, 2020, under letter id. no. L1868662448, the Department issued a

24 return adjustment notice to the Taxpayer for the 2019 tax year and reduced the amount of the

Pedro Ramirez
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1 Taxpayer’s refund because it disallowed the Taxpayer’s claim of his child as a dependent.

2 [L1868662448].

3 2. On April 21, 2020, the Taxpayer filed a written protest to the return adjustment

4 notice. [Administrative file].

5 3. On May 26, 2020, the Department acknowledged its receipt of the Taxpayer’s

6 protest. [Administrative file].

7 4. On November 12, 2020, the Department filed the request for hearing with the

8 Administrative Hearings Office. [Administrative file].

9 5. On December 11, 2020, a telephonic scheduling hearing was conducted. The

10 Taxpayer objected to the scheduling hearing. [Administrative file].

11 6. The hearing on the merits, conducted on January 14, 2021, occurred within 90

12 days of the date of the request for hearing, as required by statute. [Administrative file]. See

13 NMSA 1978, § 7-1B-8 (2019).

14 7. The Taxpayer is a resident of New Mexico and is subject to the personal income

15 tax (PIT). [Administrative file, Testimony of the Taxpayer, Testimony of Ms. Tapia].

16 8. The Taxpayer filed a PIT return for the 2019 tax year and claimed an exemption

17 for one of his children as a dependent. [Administrative file, Testimony of Taxpayer, Testimony

18 of Ms. Tapia].

19 9. The Taxpayer is the parent of the child that he claimed as a dependent on his PIT

20 return. [Testimony of Taxpayer, Testimony of Ms. Tapia]

21 10. The Department follows the federal statutes for determining whether someone is a

22 dependent. The Department will also follow a court order that allows the party to claim a

23 dependent. [Testimony of Ms. Tapia].

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1 11. The Taxpayer provided copies of court documents 1 relating to his custody of the

2 child. The documents provided were the “Final Decree” filed on February 28, 2013 (Final

3 Decree), the “Domestic Relations Hearing Officer Report and Notice of Filing” filed on January

4 7, 2019 (Report 1/7/19), the “Memorandum Order” filed February 5, 2019 (Order 2/5/19), the

5 “Amended Domestic Relations Hearing Officer Report, Notice of Hearing and Notice of Filing”

6 filed on February 5, 2019 (Report 2/5/19), the “Order Adopting Hearing Officer’s Report” filed

7 April 15, 2019 (Order 4/15/19), the “Domestic Relations Hearing Officer Report and Notice of

8 Filing” filed on May 24, 2019 (Report 5/24/19), the “Order Adopting Hearing Officer’s Report”

9 filed on June 27, 2019 (Order 6/27/19), the “Domestic Relations Hearing Officer Report and

10 Notice of Filing” filed on August 23, 2019 (Report 8/23/19), and the “Memorandum Order” filed

11 on September 13, 2019 (Order 9/13/19). [Administrative file, Testimony of Taxpayer,

12 Testimony of Ms. Tapia].

13 12. The child does not share the same principal residence as the Taxpayer for more

14 than half of the year. [Administrative file, Testimony of Taxpayer, Testimony of Ms. Tapia].

15 13. The court orders provided by the Taxpayer do not grant him the right to claim the

16 child as a dependent on his tax return. [Administrative file, Testimony of Ms. Tapia].

17 DISCUSSION

18 Burden of proof.

19 The burden is on the Taxpayer to prove that he is entitled to an exemption or deduction.

20 See Public Services Co. v. N.M. Taxation and Revenue Dep’t., 2007-NMCA-050, ¶ 32, 141 N.M.

21 520. See also Till v. Jones, 1972-NMCA-046, 83 N.M. 743. “Where an exemption or deduction

1
Copies of the documents were included in the administrative file with the filing of the request for hearing, but they
were not identified as exhibits by either party. Therefore, they will be cited to by a short description and filing date
as indicated.
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Case No. 20.11-134R
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1 from tax is claimed, the statute must be construed strictly in favor of the taxing authority, the

2 right to the exemption or deduction must be clearly and unambiguously expressed in the statute,

3 and the right must be clearly established by the taxpayer.” Sec. Escrow Corp. v. State Taxation

4 and Revenue Dep’t., 1988-NMCA-068, ¶ 8, 107 N.M. 540. See also Wing Pawn Shop v.

5 Taxation and Revenue Dep’t., 1991-NMCA-024, ¶ 16, 111 N.M. 735. See also Chavez v.

6 Commissioner of Revenue, 1970-NMCA-116, ¶ 7, 82 N.M. 97. See also Pittsburgh and Midway

7 Coal Mining Co. v. Revenue Division, 1983-NMCA-019, 99 N.M. 545.

8 Deduction for a dependent.

9 Every resident is subject to a tax on his net income. See NMSA 1978, § 7-2-3 (1981).

10 Net income excludes exemptions claimed under the Internal Revenue Code. See NMSA 1978, §

11 7-2-2 (N) (2014). The Internal Revenue Code allows for exemptions from income on claimed

12 dependents. See 26 USCA § 151. See also 26 USCA § 152 (2017) (defining dependent). See

13 also NMSA 1978, § 7-2-39 (2019) (indicating that a dependent is defined by the Internal

14 Revenue Code). A dependent may be the child of the person claiming the exemption. See 26

15 USCA § 152. In general, to claim a child as a dependent, five criteria must be met. See id. The

16 dependent must be the taxpayer’s child, the dependent must have “the same principal place of

17 abode as the taxpayer for more than one-half of such taxable year”, the dependent must not be

18 past a certain age, the dependent must not have provided more than one-half of their own

19 support, and the dependent must not have filed a joint return with a spouse for that taxable year.

20 Id.

21 The Department concedes that the Taxpayer’s child meets four out of these five criteria.

22 The element that the Taxpayer’s child fails to meet is sharing “the same principal place of abode

23 as the taxpayer for more than one-half” of the taxable year. Id. In February 2019, the court

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1 ordered that the Taxpayer was to have custody of his children “every other Friday at 6:00 PM

2 until Sunday at 6:00 PM, beginning Friday, January 18, 2018”. [Report 2/5/19, pages 4-5;

3 adopted by Order 2/5/19 and by Order 4/15/19]. This custody arrangement was continued by a

4 later order. [Report 5/24/19, page 4; adopted by Order 6/27/19]. The custody arrangement was

5 then modified to three hours every Friday and eight hours every Saturday until the Taxpayer

6 rehomed his cats and deep cleaned his house, at which time for four months the Taxpayer would

7 have his children one day a week, for four months after that the Taxpayer would have his

8 children every other weekend, and then every other weekend plus the time on Monday until

9 school began or until noon when school was not in session. [Report 8/23/19, page 5; adopted by

10 Order 9/13/19]. Based on the information in the court orders, the Department determined that

11 the Taxpayer had custody of his children and shared a place of abode with them for

12 approximately 52 days of the 2019 year, that is an average of two days every other weekend.

13 [Testimony of Ms. Tapia]. The Taxpayer did not dispute the Department’s finding but argued

14 that he shares custody of his children. The Taxpayer did not present any evidence to show that

15 his children shared his place of abode for more than one-half of the 2019 year. The last order

16 limited the Taxpayer’s custody to 11 hours per week until his cats were rehomed and his home

17 was deep cleaned. The Taxpayer did not provide evidence of when or if those conditions were

18 accomplished. Given the information in the court orders and the lack of evidence given by the

19 Taxpayer, the Department’s determination is reasonable. 2

2
Even if the Taxpayer accomplished those conditions on the date of the order, the Taxpayer’s custody of his
children would still appear to be 52 days of the year, that is 36 days from January to mid-September for two days
every other weekend, and 16 days from mid-September to the end of the year for one day per week.
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1 A noncustodial parent 3 may still claim a child as a dependent when the custodial parent

2 signs a written declaration that the custodial parent will not claim the child as a dependent and

3 the noncustodial parent attaches that written declaration to his tax return. See 26 USCA § 152.

4 There was no evidence that this occurred in the Taxpayer’s case.

5 The Taxpayer argues that the court allowed him to claim one of his children as a

6 dependent on his tax return. The Department agrees that it would honor a court order that

7 allowed the Taxpayer to claim his child as a dependent. The Taxpayer was given the opportunity

8 during the hearing to review the court orders that he had provided and to point out where in those

9 orders he had been allowed to claim one of his children as a dependent. The Taxpayer admitted

10 that the court orders that he provided and that were in the administrative file did not contain such

11 a provision. The Taxpayer asserts that it must have been in a previous order that was not

12 provided. The Taxpayer’s testimony is not persuasive. It is apparent from the documents that

13 the Taxpayer’s ability to claim one or more of his children as a dependent was an issue in

14 contention. In two reports, the custodial parent’s counsel expressed a belief that the parents were

15 prohibited from making an agreement on who could claim the children as dependents based on

16 changes to IRS regulations and the Taxpayer expressed his desire to claim one of the children or

17 all of the children every other year. [Report 1/7/19, pages 3-4. Report 2/5/19, pages 3-4;

18 adopted by Order 2/5/19]. The Taxpayer and the custodial parent were in conflict over the issue

19 and had applied to the IRS for a determination after the Taxpayer claimed one of the children

20 and the custodial parent was notified that someone else had claimed her child. [Report 5/24/19,

21 page 2]. The court encouraged the parents to resolve their issues in compliance with the IRS

3
Per the Internal Revenue Code, a noncustodial parent is the one who does not have custody of a child for more than
one-half of the year. See 26 USCA § 152.
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1 regulations. [Report 5/24/29, page 5; adopted by Order 6/27/19]. The Taxpayer failed to prove

2 that a court order allowed him to claim one of his children as a dependent.

3 CONCLUSIONS OF LAW

4 A. The Taxpayer filed a timely, written protest of the Department’s return adjustment

5 notice, and jurisdiction lies over the parties and the subject matter of this protest. See NMSA 1978,

6 § 7-1B-8 (2019).

7 B. The hearing was timely set and held within 90 days of the request for hearing. See

8 id.

9 C. The Taxpayer failed to prove that he was entitled to claim his child as a dependent

10 for an exemption on his net income. See 26 USCA §§ 151-152. See NMSA 1978, § 7-2-2. See

11 Public Services Co., 2007-NMCA-050, ¶ 32. See also Till, 1972-NMCA-046. See also Sec.

12 Escrow Corp., 1988-NMCA-068, ¶ 8. See also Wing Pawn Shop, 1991-NMCA-024, ¶ 16. See

13 also Chavez, 1970-NMCA-116, ¶ 7. See also Pittsburgh and Midway Coal Mining Co., 1983-

14 NMCA-019.

15 For the foregoing reasons, the Taxpayer’s protest IS DENIED.

16 DATED: February 1, 2021.

17 Dee Dee Hoxie
18 Dee Dee Hoxie
19 Hearing Officer
20 Administrative Hearings Office
21 P.O. Box 6400
22 Santa Fe, NM 87502

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Case No. 20.11-134R
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1 NOTICE OF RIGHT TO APPEAL

2 Pursuant to NMSA 1978, Section 7-1-25 (2015), the parties have the right to appeal this

3 decision by filing a notice of appeal with the New Mexico Court of Appeals within 30 days of the

4 date shown above. If an appeal is not timely filed with the Court of Appeals within 30 days, this

5 Decision and Order will become final. Rule of Appellate Procedure 12-601 NMRA articulates

6 the requirements of perfecting an appeal of an administrative decision with the Court of Appeals.

7 Either party filing an appeal shall file a courtesy copy of the appeal with the Administrative

8 Hearings Office contemporaneous with the Court of Appeals filing so that the Administrative

9 Hearings Office may begin preparing the record proper. The parties will each be provided with a

10 copy of the record proper at the time of the filing of the record proper with the Court of Appeals,

11 which occurs within 14 days of the Administrative Hearings Office receipt of the docketing

12 statement from the appealing party. See Rule 12-209 NMRA.

13 CERTIFICATE OF SERVICE

14 On February 1, 2021, a copy of the foregoing Decision and Order was submitted to the

15 parties listed below in the following manner:

16 Email Email

INTENTIONALLY BLANK

17
18 John Griego
19 Legal Assistant
20 Administrative Hearings Office
21 P.O. Box 6400
22 Santa Fe, NM 87502

Pedro Ramirez
Case No. 20.11-134R
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