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bk1231
Returning Member

Custodial parent but filed form 8332 as non-custodial parent

I am the custodial parent due to child living with me 9 months out of the year. We have agreed to rotate the tax dependency every other year. In previous years when I claim the child and for this year (2020, my year to claim the child) I have submitted my return with form 8332 and I was listed as the non-custodial parent, but release was given by the other parent (who was listed as custodial). Is this an issue that needs to be corrected and re-filed this year? Will it impact what the IRS looks at for stimulus checks? 

1 Best answer

Accepted Solutions
Opus 17
Level 15

Custodial parent but filed form 8332 as non-custodial parent


@bk1231 wrote:

I understand who is custodial and who is non-custodial, only now after the form has been filed. I'm trying to understand what harm or incorrect information would be at stake when we have been claiming the child every other year per a court order. I didn't realize until this year, after filing, that I should not be listing myself as non-custodial. If the non-custodial parent has been listed as custodial on form 8332, what would the issue be for me since it basically states that I am able to claim him for 2020. Does the IRS use custodial information for the stimulus checks or does it use the claim for dependency?


In turbotax, this is how you should be filing when it is not your turn to claim the child:

  • You state the child lived with you 9 months
  • And you state you will release the dependent claim to the other parent via form 8332
  • Turbotax will offer to print a form 8332 for you when you file to give to the other parent

In this situation, you still can use the child to qualify for head of household status, earned income credit and the dependent care expense credit, because those benefits always stay with the custodial parent and can't be waived, transferred or shared.  For any year when you are the custodial parent, you never attach a form 8332 to your tax return, it is not needed.  And for any year when you are the non-custodial parent, you can't sign a valid form 8332.  Form 8332 is only used when the custodial parent is releasing the dependent claim to the non-custodial parent. 

 

This is how the other parent should be filing

  • They indicate the child lived with them for 3 months
  • They indicate that they do have a signed form 8332 allowing them to claim the child as a dependent
  • They must mail the original signed 8332 to the IRS after e-filing, using a cover page that Turbotax will tell them to print out.

The other parent will qualify for the $2000 child tax credit, but not head of household status, earned income credit and the dependent care expense credit, because those benefits always stay with the custodial parent and can't be waived, transferred or shared.

 

If you have been been indicating 6 months or less for the time you had custody, you may have been denying yourself the tax benefit of household status, earned income credit and the dependent care credit, depending on whether you would have qualified for those things otherwise.  If the other parent has been claiming the child by saying they had custody more than half the year, they may have been improperly benefiting from HOH, EIC and the dependent care credit.

 

If you filed incorrectly in the past, you may want to file amended returns, if the mistake cost you money.  However, the IRS will not be troubled if you file differently now, because sometimes situations change naturally, so a change by itself is not a red flag.  It would be a red flag if you and the other parent both claimed to have custody more than half the year. 

 

For 2020, the recovery rebate is based on the dependent claim (which belongs to the custodial parent and can be waived with form 8332 to the non-custodial parent), and not the child's actual residency.

 

[Edited to add]

If you are the custodial parent and it is your turn to claim the child, you don't use form 8332 at all.  Simply indicate the child lived with you 9 months, and you are not releasing the dependent to the other child.  You will qualify for the complete package; the tax credit, EIC, HOH and dependent care credit.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*

View solution in original post

7 Replies
JoannaB2
Expert Alumni

Custodial parent but filed form 8332 as non-custodial parent

A noncustodial parent is a parent who does not have physical custody of the minor child as the result of a court order. When the child only lives with one parent, in a sole custody arrangement, then the parent which the child lives is the custodial parent while the other parent is the non-custodial parent.

 

Form 8332 is the form custodial parents can use to release their right to claim a child as a dependent to the non-custodial parent. The form can be used for current or future tax years. Additionally, custodial parents can use tax Form 8332 to revoke the release of this same right.

 

If you're the non-custodial parent this year, you don't need to file Form 8332.  On my personal information summary ,eidt your child's information:

  • Scroll down and specify the number of months the child lived with you, enter 9 months
  • Answer yes on the question "Do you have an agreement with the child's other parent about who can claim him?"..
  • Answer yes on the question "Is the other parent cliaming the child per legal agreement?.
  • The next screen will display that the child doesn't as dependent but for IEC and dependent care credit only.

Stimulus payments are calculated based on the number of dependents under 17 years old.

 

[edited 3/2/2021 @6:19 PM]

 

bk1231
Returning Member

Custodial parent but filed form 8332 as non-custodial parent

I understand who is custodial and who is non-custodial, only now after the form has been filed. I'm trying to understand what harm or incorrect information would be at stake when we have been claiming the child every other year per a court order. I didn't realize until this year, after filing, that I should not be listing myself as non-custodial. If the non-custodial parent has been listed as custodial on form 8332, what would the issue be for me since it basically states that I am able to claim him for 2020. Does the IRS use custodial information for the stimulus checks or does it use the claim for dependency?

Opus 17
Level 15

Custodial parent but filed form 8332 as non-custodial parent


@bk1231 wrote:

I understand who is custodial and who is non-custodial, only now after the form has been filed. I'm trying to understand what harm or incorrect information would be at stake when we have been claiming the child every other year per a court order. I didn't realize until this year, after filing, that I should not be listing myself as non-custodial. If the non-custodial parent has been listed as custodial on form 8332, what would the issue be for me since it basically states that I am able to claim him for 2020. Does the IRS use custodial information for the stimulus checks or does it use the claim for dependency?


In turbotax, this is how you should be filing when it is not your turn to claim the child:

  • You state the child lived with you 9 months
  • And you state you will release the dependent claim to the other parent via form 8332
  • Turbotax will offer to print a form 8332 for you when you file to give to the other parent

In this situation, you still can use the child to qualify for head of household status, earned income credit and the dependent care expense credit, because those benefits always stay with the custodial parent and can't be waived, transferred or shared.  For any year when you are the custodial parent, you never attach a form 8332 to your tax return, it is not needed.  And for any year when you are the non-custodial parent, you can't sign a valid form 8332.  Form 8332 is only used when the custodial parent is releasing the dependent claim to the non-custodial parent. 

 

This is how the other parent should be filing

  • They indicate the child lived with them for 3 months
  • They indicate that they do have a signed form 8332 allowing them to claim the child as a dependent
  • They must mail the original signed 8332 to the IRS after e-filing, using a cover page that Turbotax will tell them to print out.

The other parent will qualify for the $2000 child tax credit, but not head of household status, earned income credit and the dependent care expense credit, because those benefits always stay with the custodial parent and can't be waived, transferred or shared.

 

If you have been been indicating 6 months or less for the time you had custody, you may have been denying yourself the tax benefit of household status, earned income credit and the dependent care credit, depending on whether you would have qualified for those things otherwise.  If the other parent has been claiming the child by saying they had custody more than half the year, they may have been improperly benefiting from HOH, EIC and the dependent care credit.

 

If you filed incorrectly in the past, you may want to file amended returns, if the mistake cost you money.  However, the IRS will not be troubled if you file differently now, because sometimes situations change naturally, so a change by itself is not a red flag.  It would be a red flag if you and the other parent both claimed to have custody more than half the year. 

 

For 2020, the recovery rebate is based on the dependent claim (which belongs to the custodial parent and can be waived with form 8332 to the non-custodial parent), and not the child's actual residency.

 

[Edited to add]

If you are the custodial parent and it is your turn to claim the child, you don't use form 8332 at all.  Simply indicate the child lived with you 9 months, and you are not releasing the dependent to the other child.  You will qualify for the complete package; the tax credit, EIC, HOH and dependent care credit.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*

View solution in original post

DMarkM1
Expert Alumni

Custodial parent but filed form 8332 as non-custodial parent

Two issues.  First, the custodial parent, if maintaining a household for a qualifying child would be able to file as head of household every year even if not claiming the child as a dependent on the return. 

 

Additionally, if there were any childcare expenses, the custodial parent can also claim the childcare credit every year even if not claiming the child as a dependent that year.  

 

The only credit that moves from the custodial parent to the non-custodial parent in years they are able to claim them by court order is the Child Tax Credit. The child must be age 16 or under to qualify for this credit. 

 

Second, is the stimulus payment issue.  Whoever claimed the child on the 2019 tax return, assuming the child qualified for the Child Tax Credit (age 16 or under) would also have been eligible for the child stimulus payments ($500 and $600). 

 

If the parent did not receive those payments they are missed at this point for that parent.  There is no way for this parent to recover any child payments missed at this time.

 

The other parent claiming the child on the 2020 tax return, assuming the child qualifies for the Child Tax Credit, would also be able to claim the child Recovery Rebate Credit on the tax return ($1100) even if the other parent received payments based on the 2019 return.

 

Here is a link with more information on the Recovery Rebate Credit.

 

 

 

 

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Opus 17
Level 15

Custodial parent but filed form 8332 as non-custodial parent


@bk1231 wrote:

I understand who is custodial and who is non-custodial, only now after the form has been filed. I'm trying to understand what harm or incorrect information would be at stake when we have been claiming the child every other year per a court order. I didn't realize until this year, after filing, that I should not be listing myself as non-custodial. If the non-custodial parent has been listed as custodial on form 8332, what would the issue be for me since it basically states that I am able to claim him for 2020. Does the IRS use custodial information for the stimulus checks or does it use the claim for dependency?


Let me add some more here because I'm still not sure I have grasped what you have been doing.

 

1. In any year when you are the custodial parent and it is your turn to claim the child, you don't use form 8332. You indicate in Turbotax you had custody more than half the year, and you are not releasing the dependent.  You get the full benefits package; head of household, EIC, dependent care credit, $2000 credit, and for 2020, the recovery rebate.

 

1a. If you told Turbotax that you had custody for 9 months, but you also mailed the IRS a form 8332 that was signed by the other parent where it says "Signature of custodial parent releasing claim to exemption" and "Custodial parent’s SSN", this could raise a red flag.  If the IRS sends you a letter asking for an explanation, you will need to explain as clearly as you can, and include proof the child lived with you more than half the year.

 

1b. If you told Turbotax you had custody less than half the year, you may have paid too much tax, and you may want to amend.

 

2. In any year when you are the custodial parent and it is the other parent's turn to claim the child, you will still tell Turbotax that you had custody for 9 months, but you are releasing the dependent.  You give the other parent a form 8332 signed by you as custodial parent.  You will qualify for HOH and EIC (if you otherwise qualify) but not the $2000 child tax credit.  If you told the Turbotax program you had custody less than 9 months, you may have paid too much tax and you may want to try preparing an amended return to see if you are eligible for an additional refund. 

 

The bottom line for form 8332 is that only the custodial parent can sign the form, and the custodial parent never attaches a form 8332 to their own tax return.   Form 8332 is only signed by the custodial parent and given to the non-custodial parent and only when it is the non-custodial parent's turn to claim the dependent.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
bk1231
Returning Member

Custodial parent but filed form 8332 as non-custodial parent

Since I have submitted and claimed the child as a dependent for 2020, and even though I may have incorrectly submitted form 8332, I should still receive the recovery rebate if the 2020 return is accepted in time for stimulus check processing in 2021?

 

The other parent received the 1st and 2nd rounds of stimulus based on 2019 taxes and I also submitted to receive those funds on the tax return because 2020 was my year to claim the dependent.  

 

I am now understanding the I should be looking into amending previous years where I maybe missed the EIC based on not claiming him as living with me for more than 6 months. 

Opus 17
Level 15

Custodial parent but filed form 8332 as non-custodial parent


@bk1231 wrote:

Since I have submitted and claimed the child as a dependent for 2020, and even though I may have incorrectly submitted form 8332, I should still receive the recovery rebate if the 2020 return is accepted in time for stimulus check processing in 2021?

 

The other parent received the 1st and 2nd rounds of stimulus based on 2019 taxes and I also submitted to receive those funds on the tax return because 2020 was my year to claim the dependent.  

 

I am now understanding the I should be looking into amending previous years where I maybe missed the EIC based on not claiming him as living with me for more than 6 months. 


If you told Turbotax that the child lived with you more than half the year and you were not releasing the exemption, you will qualify for the recovery rebate.

 

Or, if you told Turbotax that the child lived with you less than half the year but you are claiming the child because the custodial parent gave you a signed form 8332, you will qualify for the rebate.  But, you would have denied yourself EIC and HOH, and might need to amend after the first refund is paid.

 

Print a copy of your return and make sure the child is listed in the Dependent box and that the Child tax credit box is checked.  The recovery rebate is listed on line 30. 

 

The confusion over you mailing an incorrect form 8332 is not likely to affect payment of your refund including the recovery rebate, but it may result in a letter later on, once the main filing season is over and the IRS starts looking for problems.

 

The recovery rebate is the 2020 stimulus.  Round 1 was $1200 per adult plus $500 per dependent in the Spring and Summer, and round 2 was $600 per adult and $600 per dependent paid from December 2020-January 2021.  If the other parent claimed the child in 2019 and received a stimulus payment, but you are claiming the child on your 2020 tax return, you would still be eligible for a rebate of $1100.

 

How a new 2021 stimulus will be calculated is currently unknown because it hasn't been made into a law yet. 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
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