This form can release a child’s dependency exemption to the noncustodial parent
Children can be a great boon to your tax situation, because they often mean a larger refund. But in cases of divorce or separation, children can also make tax returns much more complicated than they would be otherwise.
In these cases, certain decrees or settlements may necessitate the custodial parent signing over the child’s dependency exemption to the noncustodial parent.
In order to do this, you must file Form 8332 [Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent].
Use this form if you are the custodial parent and you want to
- release a claim to exemption for your child so that the noncustodial parent can claim an exemption for the child, or
- revoke a previous release of claim to exemption for your child
Release of claim to exemption
Just to get our definitions straight, the custodial parent is the parent the child lived with for the greatest number of nights during the year. If the child spent an equal number of nights with each parent, the custodial parent is the one with the highest AGI. The noncustodial parent is the other parent.
Note that there are two types of dependents: qualifying children and qualifying relatives. Generally in cases of divorce or separation, a child is treated as the qualifying child of the custodial parent. In this scenario the noncustodial parent would not be able to claim the child at all.
However, in special cases the child can be treated as the qualifying child or qualifying relative of the noncustodial parent for purposes of the dependency exemption, child tax credit, and additional child tax credit. In this case, Form 8332 would be necessary to allow the noncustodial parent to claim the child. Refer to the special rule for children of divorced or separated parents on page two of Form 8332 to see if your situation qualifies.
Form 8332 allows that noncustodial parent to claim the child as a dependent. It also allows them to claim the child tax credit and the additional child tax credit, if they are otherwise eligible.
You can use the form to release the dependency exemption for the current year or for future years.
In order to release the exemption the custodial parent needs to complete this form and give it to the noncustodial parent, who should then attach it to their tax return.
Revocation of release of claim to exemption
You can also use Form 8832 to revoke a dependency exemption that you had previously released.
A revocation is not immediate; it goes into effect for the year after you provide the noncustodial parent with a copy of the revocation.
Releasing a dependency exemption is just one sliver of the many issues that make preparing taxes a massive headache. RapidTax can make sure you get all the tax breaks your dependents entitle you to and much more.
Photo via wolfgangfoto on Flickr.
Tags: dependentsThis entry was posted on Monday, March 25th, 2013 at 3:34 pm and is filed under Tax Tips.