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Tax Guide

What is Form 8332, Release of Claim to Exemption for Child by Custodial Parent

What is Form 8332,  Release of Claim to Exemption for Child by Custodial Parent
Disclaimer

This article is for informational purposes only and does not constitute legal or tax advice.

Always consult with a tax professional for your specific circumstances.

Form 8332 is crucial – especially for divorced or separated parents.

This IRS form plays a vital role in determining which parent gets to claim specific tax benefits related to a child.

In this article, we’ll explain what Form 8332 is, how to complete it step by step, and how it impacts key tax benefits.

What is Form 8332?

Form 8332, officially known as the Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, is used by custodial parents to transfer their right to claim a dependent to the noncustodial parent.

Why is it important:

  • Divorce decrees or separation agreements alone are not sufficient for the IRS.
  • This form ensures the IRS has clear documentation of which parent is claiming the child for specific tax benefits.
  • It allows the noncustodial parent to claim the Child Tax Credit and other related benefits while maintaining compliance with tax laws.

Quick note: Even though personal exemptions were suspended under the Tax Cuts and Jobs Act, Form 8332 remains essential for other benefits tied to dependents.

How to use Form 8332

To use Form 8332, the non-custodial parent must complete and sign the form, and the custodial parent must also sign it. The non-custodial parent must then attach the completed form to their tax return when they file.

NB! The non-custodial parent can only claim the child as a dependent for the tax year(s) specified on the form.

Form 8332 preview

 

Step-by-step completion guide

Form 8332 has three key sections, each serving a specific purpose.

Here’s how to complete them:

Part I: Release of Claim to Exemption for Current Year

Use this section if you’re releasing your claim to the child’s dependency exemption for the current tax year.

Fill out the child’s name, Social Security number, and tax year in question.

Part II: Release of Claim to Exemption for Future Years

Complete this section to release your claim for multiple future years.

Specify the range of tax years for which the noncustodial parent can claim the child.

Part III: Revocation of Release of Claim to Exemption for Future Year(s)

Use this section if you previously allowed the noncustodial parent to claim the child but wish to revoke that permission for upcoming years.

Provide a copy of the form to the noncustodial parent, and file it with the IRS before the tax year in question.

Key information required:

  • The child’s full name and Social Security number.
  • Tax year(s) for which the release or revocation applies.
  • The custodial parent’s name, Social Security number, and signature.

Tax benefits affected

Filing Form 8332 allows the noncustodial parent to claim some – but not all – tax benefits related to the child.

Here’s a breakdown:

  • Child Tax Credit (CTC): The noncustodial parent can claim the CTC if Form 8332 is filed.
  • Earned Income Credit (EIC): This benefit remains with the custodial parent, as it is tied to physical custody.
  • Head of Household Filing Status: The custodial parent retains eligibility for this status, regardless of Form 8332.
  • Child and Dependent Care Credit: Typically, only the custodial parent can claim this credit.

Pro tip: Always consult a tax professional to ensure you’re maximizing your benefits and complying with IRS regulations.

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How to file Form 8332 electronically

Filing Form 8332 electronically is easy and convenient. To do so, you will need to use the IRS e-file system, which allows you to file your tax return and other forms online.

To file Form 8332 electronically, you will need to follow these steps:

  1. Gather all of the necessary documents, including your tax return, Form 8332, and any supporting documentation.
  2. Visit the IRS e-file page and create an account if you do not already have one.
  3. Follow the prompts to complete and submit your tax return and Form 8332 online.

Benefits of Form 8332 or - when to use one

There are several benefits to using form 8332 when claiming the dependency exemption for your children on your tax return.

Some of these benefits include:

  • For one, it allows the non-custodial parent to claim the child-related tax credits and deductions, which can significantly reduce their tax liability.
  • Additionally, claiming a child as a dependent may also make the non-custodial parent eligible for certain other tax benefits, such as the Earned Income Tax Credit.
  • Using form 8332 can help prevent disputes between parents about the dependency exemption and reduce the risk of an audit by the IRS.

NOTE! Form 8332 should be used by non-custodial parents who have been granted the right to claim a child as a dependent by a divorce or separation agreement or by a court order. A custodial parent must sign Form 8332 in order for the non-custodial parent to claim the child as a dependent.

Requirements for Form 8332

There are a few requirements that must be met in order to use Form 8332 to claim a child as a dependent on your tax return.

These requirements include:

  • The child must be a qualifying child or qualifying relative, as defined by the IRS.
  • The non-custodial parent must have been granted the right to claim the child as a dependent by a divorce or separation agreement or by a court order.
  • The custodial parent must sign Form 8332 and provide it to the non-custodial parent.
  • You must have a written agreement with the noncustodial parent stating that you will release your claim to the dependency exemption.
  • The agreement must be in writing and must specify the tax year or years for which the noncustodial parent can claim the dependency exemption.

FAQ

1. What does form 8332 allow?

Form 8332 allows a custodial parent to release their claim to the dependency exemption for their children to the noncustodial parent. This allows the noncustodial parent to claim the dependency exemption for the child or children on their tax return.

2. How do I stop a non custodial parent from claiming a child on taxes?

If you are the custodial parent and do not want the noncustodial parent to claim the dependency exemption for your child or children, you can do one of the following:

  • Withhold form 8332 from the noncustodial parent.
  • Revoke your previous release of the dependency exemption using form 8332.
  • Include a provision in your divorce or separation agreement stating that the noncustodial parent cannot claim the dependency exemption for your child or children.
3. Do you have to file 8332 every year?

If a non-custodial parent claims a child on their tax return without the proper documentation, such as form 8332, they may be subject to penalties and interest from the IRS.

Additionally, the custodial parent may be required to pay back any tax credits or other benefits they received as a result of claiming the dependency exemption for their child or children.

4. How do I renew my ITIN?

It depends on your agreement with the noncustodial parent. If you have a written agreement specifying the tax year or years for which the noncustodial parent can claim the dependency exemption, you only need to file form 8332 once.

If your agreement does not specify the tax year or years, or if you do not have an agreement, you will need to file form 8332 every year that you want to release your claim to the dependency exemption.

Ines Zemelman, EA
Founder of TFX