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i. Divorced or Separated Parents, or Parents Living Apart. If a <br /> child's parents are divorced, legally separated, separated pursuant to a <br /> written agreement, or live apart at all times during the last six (6) <br /> months of the calendar year, a special rule applies if: (i) the child is <br /> under age 13 or is mentally or physically unable to care for himself or <br /> herself; (ii) the child receives more than 50% of his or her support from <br /> the parents (in aggregate); and (iii) the child resides with the parents (in <br /> aggregate) for more than 50% of the year. In such situations, the child <br /> is the Qualifying Individual of the custodial parent even if the custodial <br /> parent has released the right to claim the child as a dependent. The <br /> custodial parent is the parent identified in Section 152(e) of the Code <br /> (i.e., generally the parent with whom the child resides for the greater <br /> number of nights during the calendar year or, if the child resides with <br /> both parents for an equal number of nights, the parent with the higher <br /> adjusted gross income for the year). <br /> ii. Two or More Persons Claiming a Child as a Qualifying <br /> Individual. If the special rule described above regarding divorce, etc. <br /> does not apply, the special tie-breaker rules of Section 152(c)(4) of the <br /> Code may apply. If an individual is a qualifying child (as defined in <br /> Section 152 of the Code) with respect to more than one person, then: <br /> a. If both persons are the individual's parents and they file a joint <br /> federal income tax return, the child is the Qualifying Individual of <br /> both parents. <br /> b. If both persons are the individual's parents and they file <br /> separate federal income tax returns, then the child is the <br /> Qualifying Individual of the parent with whom the child resided <br /> for the longest period of time during the calendar year (or, if <br /> child resides with both parents for the same amount of time <br /> during the year, the parent with the highest adjusted gross <br /> income for the year). However, if that parent (i.e., the custodial <br /> parent or the parent with the highest adjusted gross income) <br /> does not claim the child as a qualifying child (as defined in <br /> Section 152 of the Code) for any purpose (i.e., a dependent care <br /> expense reimbursement program, the earned income credit, the <br /> dependency deduction, the child tax credit, and the dependent <br /> care credit), then the child is the Qualifying Individual of the <br /> other parent (i.e., the non-custodial parent or the parent with <br /> the lowest adjusted gross income). This is the one person that is <br /> entitled to treat the child as a Qualifying Individual. <br /> C. If one person is the individual's parent and the other is not, the <br /> child is the Qualifying Individual of the parent. However, if the <br /> parent does not claim the child as a qualifying child (as defined <br /> in Section 152 of the Code) for any purpose (i.e., a dependent <br /> care expense reimbursement program, the earned income credit, <br /> the dependency deduction, the child tax credit, and the <br /> dependent care credit), then the child is the Qualifying Individual <br /> of the other person (i.e., the non-parent). This is the one <br /> person that is entitled to treat the child as a Qualifying <br /> Individual. <br /> d. If neither person is the individual's parent, the child is the <br /> Qualifying Individual of the person with the highest adjusted <br /> ©2012 Hitesman&Wold, P.A. 35 City of Elk River <br /> Flexible Benefits Plan <br />