In situations where divorced or separated parents share custody of a child, the custodial parent (the parent with whom the child lived for the greater part of the year) typically holds the right to claim the child as a dependent for tax purposes. However, the custodial parent can choose to release this claim to the noncustodial parent by using this form.
Key Points:
Purpose of Form 8332:
Allows the custodial parent to transfer the dependency exemption to the noncustodial parent, enabling the latter to claim the child as a dependent on their tax return.
Completing the Form:
The custodial parent must provide the child's name, the tax year(s) for which the release applies, their own Social Security number, and their signature with the date.
The form can be used to release the claim for the current tax year, specific future years, or all future years.
Revoking a Previous Release:
If the custodial parent decides to revoke a prior release, they must complete Part III of Form 8332.
The revocation becomes effective no earlier than the tax year following the year in which the custodial parent provides the noncustodial parent with a copy of the revocation.
The custodial parent must attach a copy of the revocation to their tax return for each year they claim the child as a dependent due to the revocation. irs.gov
Filing Requirements:
The noncustodial parent claiming the child as a dependent must attach a copy of Form 8332 to their tax return for each year the release is effective.
If filing electronically, Form 8332 should be submitted with Form 8453, "U.S. Individual Income Tax Transmittal for an IRS e-file Return." irs.gov
Limitations:
Releasing the dependency claim does not allow the noncustodial parent to claim certain benefits, such as the Earned Income Tax Credit (EITC), which remains available only to the custodial parent. irs.gov
By properly utilizing Form 8332, parents can clearly define which party is entitled to claim a child as a dependent, thereby preventing potential disputes and ensuring compliance with IRS regulations.