Administrative Rules of Montana
Department 42 - REVENUE
Chapter 42.15 - INCOME TAX
Subchapter 42.15.4 - Personal and Dependent Exemptions
Rule 42.15.401 - DEFINITIONS

(a) a child who lived with the taxpayer in the taxpayer's home as a member of the taxpayer's family if placed with the taxpayer by an authorized placement agency for legal adoption; or

(b) a foster child (any child who lived with the taxpayer in the taxpayer's home as a member of the taxpayer's family for the entire year).

(a) The list of individuals in 15-30-2115, MCA, for whom a Montana dependent exemption is allowed is broader than the list of eligible relatives for whom a federal dependent exemption is allowed. The list includes a cousin or other lineal descendant of the sister or brother of the mother or father of the taxpayer, if for the taxpayer's tax year the individual received institutional care because of physical or mental disability, and if, before receiving the institutional care, they lived with the taxpayer in the taxpayer's home as a member of the taxpayer's family.

(b) The list of individuals in 15-30-2115, MCA, for whom a Montana dependent exemption is allowed is narrower than the eligible list of individuals for whom a federal dependent exemption is allowed and excludes a child placed for adoption, a foster child, and any other person who is not related to the taxpayer as provided in 15-30-2115, MCA, unless:

(c) A federal dependent exemption may be claimed for a person under a multiple support agreement exception even if the taxpayer does not provide over half of their total support. Because Montana does not provide a multiple support agreement exception, a dependent exemption is not allowed for any person who does not receive over half of their total support from the taxpayer. See the definition of "support," however, for special rules for determining the support of a child of divorced or separated parents.

(a) Under the federal rules, the support provided to an individual by both spouses is considered only if a joint return is filed. For Montana income tax purposes, the support provided by both spouses is considered whether the spouses file a joint return or separate returns if the spouses agree in writing which spouse may claim an exemption for a dependent. If the spouses file separate returns on the same form, a separate written agreement is not required. If spouses file separate returns on separate forms and do not agree in writing which spouse may claim a dependent exemption for an individual, a dependent exemption may be claimed only by the spouse, if either, who provided over half the individual's total support. By filing a separate return claiming a dependent exemption for an individual, a married taxpayer represents, as applicable, either that both spouses have together provided over half of the individual's total support and the spouses have agreed in writing the taxpayer may claim an exemption for the dependent or that the individual for whom the taxpayer is claiming a dependent exemption has received over half of their total support from the taxpayer alone. The agreement by spouses filing separate returns is a tax record the taxpayer must retain and provide the department on request.

(b) If a decree of divorce or legal separation, or a binding written agreement between legally separated spouses or divorced former spouses, provides that the taxpayer may claim, and the other parent will not claim, a dependent exemption for a child for state income tax purposes, the taxpayer is treated as having provided over half of the child's support for Montana income tax purposes. If the taxpayer entitled to claim a dependent exemption under this rule is remarried, the taxpayer may claim the exemption on a joint return or, as provided in (4)(a), the taxpayer or taxpayer's spouse may claim the exemption.