topic Dependant in Deductions & credits

Dependant

dljkbns — Sun, 14 Feb 2021 21:07:22 GMT

I'm helping my daughter and son in law with their taxes. The are married but file separately. Nothing has changed since last year when my daughter was able to claim their daughter as a dependent except a question or two in Turbo Tax and now she can't claim her daughter as a dependent without filling out form 8332(?) that is a form for divorced or separated parents.

Re: Dependant

JoannaB2 — Sun, 14 Feb 2021 22:13:10 GMT

Yes, If your daughter is filing electronically, she must file Form 8332 (release to exemption for child by a custodial parent) with form 8453 (tTax Transmittal for an IRS E-file return), The forms must be printed , signed by the person who relaeased custody, and must be mailed to the IRS within 3 days of a successful transmittal of the return.

See, form 8453, link for infomation where to file.

Re: Dependant

dljkbns — Tue, 16 Feb 2021 00:28:15 GMT

Thanks JoannaB2 I'd like to give a little information, just to see of it matters, I know I didn't give the full picture the first time...I was a little frustrated. My daughter is married and lives happily with her husband and daughter. She is a school teacher and is enrolled in a program that her student loan will be forgiven after she teaches for ten years (just a year or two to go!). She was advised that they should file separately while she is in that program. In previous years, he has taken the mortgage interest deduction and she has claimed their daughter. Now TurboTax asks of he has given up his legal right to claim their daughter, which I think understandably they are hesitant to do (giving up legal right). They were also surprised because form 8332 has to do with divorced or separated couples. If they have to go the form 8332 route I'm sure that's what they will do but just wanted to give you the full picture before going ahead. Thanks so much.

Re: Dependant

dljkbns — Tue, 16 Feb 2021 00:35:12 GMT

Re: Dependant

DawnC — Tue, 16 Feb 2021 00:59:07 GMT

If he is the father and they all live together, no form is required. Those questions can be confusing. Either one of them can claim the child without filing an 8332. When you get to the question about an agreement, answer NO. That form is for couples that live apart.

But what really concerns me is why they would be filing separately. That sounds like really bad advice as Married Filing Separately is the worst filing status, especially when a child is involved. I would check that because if they have been filing MFS for years now, they may have forgone a lot of credits. They can still amend some returns if needed.

The main reason you'd want to file separately is to protect yourself from inaccurate tax information reported by your spouse, or in cases where your spouse refuses to file a joint return (or refuses to file period) and you don't want to get in trouble.

Generally, filing jointly will give you a bigger refund or fewer taxes due. When you file separately, your tax rate is higher and you won't be able to claim:

Education benefits
Earned Income Credit (EIC)
Child and Dependent Care Credit (usually)
Adoption Credit (usually)
The same benefit married filing jointly couples get for itemized deductions, the Child Tax Credit, and capital losses (all of these deductions are reduced by half)
The standard deduction if your spouse is claiming itemized deductions

On top of that, if you live in the community property states of Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin, you have to deal with community property allocations and adjustments, which adds extra work and complexity to your tax preparation chores.

Tip: Only taxpayers who were still legally married as of December 31, 2020, are able to file as married, whether jointly or separately.

Filing jointly means you file one tax return. When filing separately, you file two tax returns and pay double.

Want to compare filing jointly vs. separately?