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<br />© 2012 Hitesman & Wold, P.A. City of Elk River <br />Flexible Benefits Plan <br />35 <br />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 />Page 128 of 254