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Divorces take an emotional and financial toll on the entire family, so it’s understandable that most people don’t think about how separating from their ex-spouses will impact their taxes.
IRS Form 8332 solves this problem by allowing a custodial parent to release the child’s dependency exemption to the noncustodial parent for a limited or unlimited time.
The same form allows the custodial parent to reclaim the child’s dependency from the noncustodial parent by revoking their right to claim a child as a dependent on their tax return.
Besides enabling a noncustodial parent to claim their child as a dependent, this form also makes them eligible for different tax benefits. Let’s review IRS Form 8832 and see how to use it to claim dependents and benefits after a divorce.
Table of Contents
The Purpose of IRS Form 8332
Section 152(e) of the Internal Revenue Code defines the rules for a custodial parent to release the dependency claim to a noncustodial parent for a year.
IRS Form 8332 formalizes the agreement between ex-partners regarding child dependency rights for a specific tax year.
A custodial parent can also use the form to transfer child dependency rights to the noncustodial parent permanently or reclaim their right to claim a child as a dependent. On the other hand, filing Form 8832 with a tax return makes a noncustodial parent eligible for child tax credit, additional child tax credit, and credit for other dependents.
Understanding the Release of Claim to Exemption
Custodial parents waive their rights to some, but not all, tax benefits they’re eligible for after signing Form 8332. Hence, even if you sign this form, you can still claim Earned Income Credit, Head of Household filing, and dependent care credit.
The TCJA eliminated dependent exemptions until 2025. So noncustodial parents can only use Form 8332 to increase their tax refunds by $1,500 to $2,000 per child by claiming the additional child tax credit or the child tax credit.
The credit for other dependents is limited to $500 per qualifying dependent, and it’s only available to taxpayers whose adjusted gross income is under $200,000.
Custodial parents must fill out and sign multiple Form 8332s if they’re releasing the dependency claim for two or more children. The noncustodial parent must attach these forms to their tax return and resubmit them to the IRS annually as long as they’re eligible for the exemption.
Filing this form is one of many ways to release the claim to exemption, as ex-spouses can draft a written document that serves as the form’s substitute.
Also, divorce decrees finalized between 1984 and 2009 can substitute Form 8332, but only if the pages from the decree contain the same information as Form 8332. The divorce decree must provide the following information:
- The noncustodial parent can claim the child as dependent without regard to any condition (such as payment of support).
- The other parent will not claim the child as dependent.
- The years for which the claim is released.
The noncustodial parent must submit the divorce decree’s cover page that includes the custodial parent’s SSN, all pages that contain proof of release of claim to exemption, and the page with the custodial parent’s signature and date of the agreement with their tax return.
How to Fill Out and File Form 8332?
Preparing Form 8832 is the custodial parent’s responsibility, while noncustodial parents must file it with the IRS.
You’ll have to complete Part I of this form if you’re releasing a claim for exemption for a single tax year and provide the information below.
- Child’s name
- The tax year during which the release is valid
- Custodial parent’s SSN and signature
- The date of the agreement
If you want to give your ex-partner the right to claim your child for more than one tax year, you should fill out Part II of Form 8832. This section of the document contains the same information as Part I.
Custodial parents who want to waive their claim to exemption rights permanently can write ‘all future years’ on the tax years line in the form’s Part II section.
After receiving Form 8332 from the custodial parent, the noncustodial parent must file it electronically or send it to the IRS via post.
When filing a return electronically, noncustodial parents must attach Form 8453, US Individual Income Tax Transmittal, for an IRS e-File Return, along with Form 8332.
The Eligibility to Claim Dependents and Credits
Obtaining Form 8832 from their ex-spouses doesn’t automatically make noncustodial parents eligible for tax benefits that come with claiming a dependent. Noncustodial parents must meet these criteria to claim a child as dependent.
- A child must meet the IRS qualifying child requirements (Age, Relationship, Support, Residence)
- Both parents must provide at least half of the child’s support
- A child must live with a custodial or noncustodial parent for six months or longer during the year.
Noncustodial parents who don’t meet these requirements are ineligible to claim their children as dependents even if they receive Form 8332 from their ex-partners.
The IRS can audit a return and impose civil penalties on noncustodial parents who claim a child as their dependent and fail to provide Form 8332 or a document that proves the release of claim to exemption.
The IRS may require the noncustodial parent to pay back the amount they received by claiming child dependency or tax benefits without proper authorization.
It’s worth adding that sometimes passing the tax exemption from one parent to the other without a court order isn’t possible.
Reclaiming Child Dependency
Child dependency exemption and tax benefits significantly reduce tax liability, so ex-spouses commonly use Form 8332 if the custodial parent earns less than the noncustodial parent.
However, custodial parents don’t waive their right to reclaim child dependency exemption permanently by giving this form to their ex-partners.
Part III of this Form 8332, titled Revocation of Release to Claim for Future Year(s), enables custodial parents to regain the right to claim their children as dependents on tax returns.
The form allows a child’s parent to revoke a previous release of child dependency for a specified or unspecified number of tax years.
Custodial parents should include their SSN and child’s name, specify how long the claim to exemption will be effective, and sign the form before submitting it with their tax return to the IRS.
However, the revocation isn’t effective immediately, so the child’s noncustodial parent can still claim it as dependent for the tax year in which the custodial parent files Form 8332.
The revocation becomes effective the following tax year, and parents who file this form with their 2022 return can claim their child as a dependent on their 2023 returns due by mid-April 2024.
Frequently Asked Questions
The IRS doesn’t allow noncustodial parents to claim qualifying children as dependents without the custodial parent’s consent.
As a result, the IRS can reject the noncustodial parent’s dependency claim if they cannot provide Form 8332.
A child’s custodial parent is the parent with whom a child spends more nights during the year. If a child spends an equal number of nights with both parents, a parent with a higher adjusted gross income is considered a custodial parent.
Custodian parents must file Form 8832 annually with their tax returns after reclaiming child dependency.
The IRS doesn’t allow couples divorced after 2009 to substitute Form 8332 with pages from a divorce decree when releasing the right to claim the dependency exemption.
The Advantages of IRS Form 8332 for Divorced Couples
Doing what is best for their children is every parent’s responsibility, and this responsibility doesn’t disappear after a divorce.
IRS Form 8332 allows divorced parents to minimize their tax burdens while continuing to support their children.
The form eliminates the need for arguments over who can claim the child as their dependent by preventing the noncustodial parent from claiming child dependency without their ex-spouse’s consent.
However, each situation is different, so custodial and noncustodial parents should consult their attorneys before using Form 8332 to release or reclaim child dependency.
Author:
Logan is a practicing CPA and founder of Choice Tax Relief and Money Done Right. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.
