IRS Form 8332: The Tricky Subject of Taxes, Divorce, & Children
Divorce is a tricky business in lots of ways, and taxes are no exception. When there are children involved, complications arise regarding which parent claims the child exemption on his or her federal income tax return.
Which parent gets custody is no business of the IRS, but who claims the child exemption is based on custody so it does matter when it comes to filing taxes. The rule of thumb is that the custodial parent is the one who gets to claim the exemption for a child or children.
Use Form 8332 to Give Away Your Right to Claim the Child Exemption
This is the rule of thumb but if both parents agree, they can override this standard and the noncustodial parent can claim the exemption. Remember, exemptions will reduce the tax bill of the individual taxpayer on the federal 1040 form.
Use IRS form 8332 to designate the noncustodial parent as the one with the right to claim the exemption for a child. You’ll notice from the lengthy title of this form that it’s also used to revoke that designation. Here’s the full title of form 8332:
Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent
Whew! Could they uses the word release a few more times in that title? The form is hardly a form, since it’s just a handful of boxes to fill in and sign. Here’s a link to the IRS website’s pdf version of Form 8332 so you can download or take a look.
As you can see, all you do is name the child, the tax year, put your social security number, date, and sign it. If you want the release to last more than the current tax year, fill out part 2. Otherwise leave it blank. If you want to take back the release, fill out part 3. Otherwise leave it blank.
The noncustodial parent must attach Form 8332 to his or her tax return to prove he or she has the right to claim the child exemption.
What Else Can Form 8332 Do?
If you release your claim to exemption for your child to your ex, you are also giving him or her the right to claim the child tax credit. If you have more than one child and all are covered by the 8332, your ex-spouse also now has the right to claim the additional child tax credit. Of course, other normal qualifications still apply to those tax credits. They are not automatic.
Who is the Custodial Parent?
The custodial parent is the one with whom the child lived with more nights than the other. If the child live with each spouse completely equally, the spouse with the higher adjusted gross income is the custodial parent. See IRS Pub 501 for more details on custodial definitions.