Divorced taxpayers with children that fail to include an executed Form 8332 with their tax return will lose the exemption for that particular tax year. Form 8332 (Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent) allows parents to do the following.
- Release a claim to exemption for a child so that the noncustodial parent can claim an exemption for the child.
- Revoke a previous release of claim to exemption for a child.
I.R.C. § 151(c) allows as a deduction an exemption for each dependent of a taxpayer. Under § 152, a dependent is defined as either a qualifying child or a qualifying relative. To be a qualifying child, among other requirements, the individual must have “the same principal place of abode as the taxpayer for more than one-half of such taxable year.” A “custodial parent” is “the parent having custody for the greater portion of the calendar year.”
Under I.R.C. § 152(e), a child who is in the custody of one or both of the child’s parents for more than one-half of the calendar year and who receives more than one-half of his or her support for the year from his or her parents may be considered the qualifying child of a noncustodial parent if (1) the custodial parent signs a written declaration that she will not claim the child as a dependent and (2) the noncustodial parent attaches the written declaration to his return. Form 8332 is used as a taxpayer’s written declaration in this situation.
According to a recent Tax Court decision in Eichinger v. Commissioner, T.C. Summary Opinion, 2016-18 (Apr. 21, 2016), “. . . the touchstone for decision is whether the custodial parent executed a Form 8332 (or a similar written statement) and whether the noncustodial parent then attached such form (or statement) to his return.” In this case, the taxpayer claimed all three of his children from a prior marriage on his joint tax return, but failed to attach a Form 8332 (or similar written statement executed by his ex-wife) to his return.
Failure to file a Form 8332 or similar statement may be costly. If you a parent and have questions about the § 151 exemption discussed herein or any other child-related deduction or credit, call THE TAX EXPERTS at the Thorgood Law Firm www.thorgoodlaw.com. For a FREE consultation, call 212-490-0704.
