If the custodial parent refuses to sign, the noncustodial parent can’t claim the child, even if the agreement says they should. In some cases, parents end up in tax court over this issue—but in the meantime, the IRS will stick to its form requirement. Custodian parents must file Form 8832 annually with their tax returns after reclaiming child dependency. However, custodial parents don’t waive their right to reclaim child dependency exemption permanently by giving this form to their ex-partners.

It’s worth adding that sometimes passing the tax exemption from one parent to the other without a court order isn’t possible. If you want to give your ex-partner the right to claim your child for more than one tax year, you should fill out Part II of Form 8832. This section of the document contains the same information as Part I. You’ll have to complete Part I of this form if you’re releasing a claim for exemption for a single tax year and provide the information below. To avoid tax and legal issues, parents should ensure Form 8332 is properly signed, submitted, and matches legal agreements.

This section explores the conditions under which such a revocation is permissible and the process for executing it. It is important to understand that revoking a release of a claim involves specific IRS guidelines and may have implications for both parents’ future tax filings. Part III of this Form 8332, titled Revocation of Release to Claim for Future Year(s), enables custodial parents to regain the right to claim their children as dependents on tax returns. This tax form from IRS is used for custodial parents to pass the tax exemption for child to noncustodial parent.

The Purpose of IRS Form 8332

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How does revoking a release work?

  • Form 8332 is an IRS document that allows the custodial parent (the parent the child lives with most of the time) to give up their right to claim the child as a dependent on their tax return.
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  • Carrie has full-custody of the children, and by law has the default right to claim the children as dependents.
  • IRS Form 8332 solves this problem by allowing a custodial parent to release the child’s dependency exemption to the noncustodial parent for a limited or unlimited time.
  • Are you a divorced family, wondering how you’ll handle taxes when claiming your dependents?

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The Advantages of IRS Form 8332 for Divorced Couples

Section 152(e) of the Internal Revenue Code defines the rules for a custodial parent to release the dependency claim to a noncustodial parent for a year. Form 8332 also affects eligibility for the Credit for Other Dependents (ODC), which provides up to $500 for dependents who don’t qualify for the CTC. However, it does not impact the Earned Income Tax Credit (EITC) or Head of Household filing status, which remain with the custodial parent. If you forgot to send a 1099 form to a contractor, you should still send it as soon as possible to avoid penalties from the IRS. It’s important to report all income earned by the contractor to ensure accurate tax filings.

  • Divorced or separated parents in the United States may reach agreement on which of you will claim a tax exemption for your child.
  • Secondly, it’s to revoke a previous release of claim to the exemption for child.
  • Failing to do so can result in IRS audits, penalties, or lost tax benefits.

What Happens if Form 8332 is Not Filed Correctly?

In addition to dealing with issues focusing on the distribution of property and how to handle retirement assets, child custody and child support arrangements must also be made. During these negotiations it can be easy to gloss over some of the more important matters, like taxes. The form requires minimal information – it’s all information you’ll have handy. You sign the form to show your agreement to give your ex-spouse the right to claim your child as a dependent. If releasing the right to claim your child as a dependent makes financial sense, you must complete Form 8332 to make it official, aka legal. Failing to comply with Form 8332 requirements can lead to significant issues.

Its mainly purpose is to release or revoke of release of claim to exemption for child. After filling the form from custodial parent, the noncustodial parent can then claim the dependent child. It’s simple to fill out the form as custodial parent as the form only contains a few lines. Being custodial parents, you may need this IRS 8332 tax form to release the right to claim for a child as a dependent. After that, the noncustodial parent can claim for the child about the exemption. Also, this form has other purposes like applying some tax benefits, etc.

The same form allows the custodial parent to reclaim the child’s dependency from the noncustodial parent by revoking their right to claim a child as a dependent on their tax return. Another frequent issue is assuming a prior release remains valid indefinitely. If the form was only signed for a single year, the noncustodial parent must obtain a new release for subsequent years. Custodial parents who revoke a previously granted exemption must follow the proper process and notify the noncustodial parent in writing. Failing to do so can result in IRS audits, penalties, or lost tax benefits.

The IRS does not accept divorce decrees or separation agreements as substitutes unless they meet strict requirements. A valid agreement must clearly state the custodial parent’s intent to release the claim, include the child’s name, and specify the tax years covered. Even then, the IRS may request additional documentation if the language is unclear. Giving the completed Form 8332 to the noncustodial parent gives up more than just a dependent. For example, additional child tax credits are only available to the person who claims the child as a dependent. The formal name is Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent.

It allows custodial parents (the parent with whom the child primarily resides) to manage who claims their child as a dependent on their tax return. If they incorrectly release the claim without proper documentation, they may lose access to tax benefits they are entitled to. Disputes over dependency claims can escalate into costly legal battles, increasing stress and legal fees. Such conflicts can also complicate future agreements on financial responsibilities for the child. If a what is form 8332 noncustodial parent claims a dependent without Form 8332, they risk losing tax benefits, such as the Child Tax Credit, which is $2,000 per qualifying child for the 2024 tax year. This can have financial consequences, especially if refunds or credits were factored into financial planning.

As the custodial parent, you complete the form and give it to your ex-spouse – not the IRS. When the non-custodial parent completes his/her tax returns, Form 8332 must accompany it. Are you a divorced family, wondering how you’ll handle taxes when claiming your dependents?

She also wrote blogs about data recovery, disk partitioning, and data backup, etc. Whether you give up dependency status for one tax year or multiple years, IRS Form 8332 takes care of giving your ex-spouse the deductions. Taxes are incredibly complex, so we may not have been able to answer your question in the article. Get $30 off a tax consultation with a licensed CPA or EA, and we’ll be sure to provide you with a robust, bespoke answer to whatever tax problems you may have. Set your business up for success with our free small business tax calculator. Free up time in your firm all year by contracting monthly bookkeeping tasks to our platform.

In this part, you can release a claim for the current year or future years. Secondly, it’s to revoke a previous release of claim to the exemption for child. IRS Form 8332 is used to release a parent’s claim to a child’s dependency exemption for tax purposes.

For 2024, the CTC provides up to $2,000 per qualifying child, with up to $1,600 refundable. The ACTC benefits parents who don’t owe enough in taxes to fully use the CTC, allowing them to receive a portion as a refund. These credits can reduce tax liability or increase a refund, making it important to ensure the correct parent claims them.