Basically, to prepare a correct tax return, you would enter the children’s information, answer that they lived with you more than half the year, then answer “yes“ that you will give the other parent a form 8332. This will create a proper tax return for you that does not claim the child tax credit but does claim other benefits you are allowed.
The other parent, to prepare a correct tax return, should answer that the children do not live with them more than half the year, and that they will receive a form 8332. Their tax program will then create a proper tax return that will claim the tax credit but not any other benefits. After that parent files their return, they have three days to mail the original signed form 8332 to the IRS to support their tax return.
If both parents do this properly, then both tax returns will be correct and there will be no e-filing problems.
