Me and my ex wife have 3 children. We divorced March 1 2021, but I didn't move out till November 2021. She is the custodial parent according to our divorce decree. I am going to claim the children on my 2021 tax return. With form 8332, it only shows a space to list one child. How does she list all 3 children so that I can claim them? Are 3 forms needed? Does she list all 3 children on the same line on one form? Also how does head of House hold claim work when we basically lived together for a majority of the year, even after being divorced?
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As a champ mentioned below, since you lived together, you do not need to file form 8332.
Since you were legally divorced, whoever provided the majority of the support would be the one that could claim Head of Household. A requirement to claiming Head of Household is that you must have paid more than half of the cost of keeping up a home.
@JOHNNY3 (Edited 01/21/2022 @ 6:42AM PST)
Here are a couple of rules that might affect who can claim each of the children:
Both parents claim the child on separate tax returns: The parent with whom the child lived the longest during the year may claim the child
If the child lived with each parent for the same amount of time: The parent with the higher adjusted gross income (AGI) for the year may claim the child
Form 8332 is not required for 2021 in your situation, since you also had physical custody of the children more than half the nights of the year. If you were not in agreement, and both claimed the children, the IRS would award the dependents to your ex because the first tiebreaker is who had custody the longest.
In fact, you can't use form 8332 to “split” the tax benefits of a dependent, and the "special rules for children of divorced or separated parents" do not apply to you this year, because you are both “custodial parents” in the eyes of the IRS.
Whichever of you paid more than half the overall household expenses for the year can claim HOH status, if that person also claims at least one qualifying child dependent. It only needs to be $1 more than half. If you split the expenses exactly evenly, then no one can claim HOH because exactly half is not more than half.
The person who paid more than half the expenses is not necessarily the person who earned the most money, because money might be been spent on other people outside the household, or put into savings, and not spent on maintaining the household.
If your spouse was the person who paid more than half the household expenses, your spouse can't file HOH unless she also claims at least one child as a dependent. As I mentioned before, the special rules for children of divorced or separated parents, that allow one parent to claim the child as a dependent (using form 8332) and the other parent to use the child to qualify for HOH don't apply to you in 2021 because you both had physical custody more than half the year.
https://www.irs.gov/publications/p501#en_US_2021_publink1000220904
She is the custodial parent according to our divorce decree.
Just so you know, the IRS doesn't care about your decree. They have their own rules which you must follow when it comes to federal taxes. The below information is from about 3-4 years ago, and to the best of my knowledge has not changed.
When you have a situation where the parents of a qualifying dependent child are divorced or separated, there are IRS rules that must be followed to determine which parent can claim the child as a dependent on their tax return. These rules are established by federal law and cannot be over-ridden by any judge below a federal judge. Since federal judges do not deal with divorce or custody cases, that will just never happen. So regardless of what any court order you have may say, it just flat out does not apply to your federal tax return. Depending on your specific and explicit situation, it may apply to your state return. But that’s extremely rare since such cases are handled by county or lower level courts and not state courts.
So when it comes to your federal tax return, what your court order may say just flat out does not apply and does not matter. There are no exceptions I'm aware of here. Here’s how it works with your federal return. Read all the below, because the oxymoronic ruleset applies here.
First, the IRS has clear cut definitions you have to know.
Custodial Parent – This is the parent with whom the child lived for more than 182 nights of the tax year. The nights do not have to be consecutive. Temporary absences for things such as hospital stays, spending the night with friends, away for school, etc count as a night spent with the custodial parent. In a case where the separation occurred during the year and the child did not stay exclusively with either parent for more than 182 nights, then the custodial parent is the parent with whom the child stayed the most nights during the tax year. In case of a tie, the custodial parent is the parent with the highest AGI.
Non-custodial Parent – This is the parent that does not meet the requirements to qualify as the custodial parent.
The custodial parent can relinquish their right to claim the child to the non-custodial parent for a specified number of tax years by completing IRS Form 8332 and providing it to the non-custodial parent. The non-custodial parent will need to keep this form on file for 3 years or until the child no longer qualifies as a dependent – whichever occurs last. If audited and requested by the IRS, the non-custodial parent will need to provide a copy of the form to the IRS. If the non-custodial parent does not provide a copy of the form to the IRS upon their request, then the dependent child tax credit will be revoked and the non-custodial parent will have to pay it back to the IRS with interest, and possibly with fines and penalties too.
In cases where a judge below the federal level has ordered the parents to swap claiming the child each year, the IRS does not and will not recognize that order, as it goes against federal law. However, that lower level judge can legally order the custodial parent to complete and sign the 8332. If the custodial parent refuses the sign the 8332 then the judge can find that parent in contempt of court and take whatever legal actions allowed against that custodial parent for not following a legal order by not signing or refusing to sign the form 8332. The bottom line here is, without a signed form 8332 the non-custodial parent just flat out can not legally claim the child as a dependent on the non-custodial parent’s tax return.
One final thing to note: The federally recognized custodial parent is the one who claims the EIC for the child. The non-custodial parent can not claim the EIC no matter what. In this case, the custodial parent would still enter the child in the dependent’s section and after working through the menus correctly they would appear with a status of non-dependent on the custodial parent’s tax return. Thus, qualifying them for the EIC for the child which they are legally entitled to even though they signed the 8332 giving dependent rights for that tax year to the non-custodial parent.
It is important to understand that all of @Carl ‘s information will apply to 2022 and later, but does not apply to 2021 because both parents are custodial parents under IRS regulations for 2021, because both parents and the children lived in the same home for more than half the year.
All the referenced information that applies to 2021 and 2022 and after, can be found here.
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