All Posts

Form 8332 has nothing to do with claiming your grandchildren.   That is a signed agreement that is used only between divorced or never married parents who share custody.    You are not divorced from the children's father, nor are you a "couple" who share custody.       If the children and their mother live with you former than half the year (over 183 nights) and you are providing over half their support, you can claim them as dependents on your own tax return.   If your daughter is claimed as a dependent she cannot claim dependents of her own.       IRS interview to help determine who can be claimed: https://www.irs.gov/help/ita/who-can-i-claim-as-a-dependent      WHO CAN I CLAIM AS A DEPENDENT?   You can claim a child, relative, friend, or fiancé (etc.) as a dependent on your 2025 taxes as long as they meet the following requirements: Qualifying child They're related to you. They aren't claimed as a dependent by someone else. They're a U.S. citizen, resident alien, national, or a Canadian or Mexican resident. They aren’t filing a joint return with their spouse. They're under the age of 19 (or 24 for full-time students). No age limit for permanently and totally disabled children. They lived with you for more than half the year (exceptions apply). They didn't provide more than half of their own support for the year. Qualifying relative They don't have to be related to you (despite the name). They aren't claimed as a dependent by someone else. They're a U.S. citizen, resident alien, national, or a Canadian or Mexican resident. They aren’t filing a joint return with their spouse. They lived with you the entire year (exceptions apply). They made less than $5200 in 2025 (not counting Social Security) You provided more than half of their financial support. When you add someone as a dependent, we'll ask a series of questions to make sure you can claim them. There may be other tax benefits you can get when you claim a dependent. Related Information: What does "financially support another person" mean? What is a "qualifying person" for Head of Household?  

Since you are unable to obtain a return of excess contribution from either the 403(b) or the 401(k) (because the funds are no longer there), the excess $6,500 elective deferral for 2025 is simply taxable on your 2025 tax return.  There is nothing else to do.  Despite the $6,500 being taxable, it did not become after-tax basis in either employer plan, so no after-tax basis got rolled over to the IRA.  There is nothing to report on Form 8606 regarding this.   The "penalty" for making an uncorrected excess deferral is double taxation.  This $6,500 will be taxed a second time when distributed as an ordinary distribution from the IRA.