Will IRS process refund that includes non-custodial dependent before receiving form 8332

[rolfhamre]

My daughter is the custodial parent of her child. For tax year 2021, she will not sign and give form 8332 to the father of the child (for reasons that I don't think I need to get into). 

The instructions for non-custodial parents is that they need a signed 8332 (signed by non-custodial parent) before filing. The father filed before my daughter, and without form 8332, and claimed the child.  He claimed that the child lived with him for 4 months of the year (clearly non-custodial).

My daughter's e-file was rejected because the child had already been claimed by the father.  I understand that the remedy for my daughter is to file a mail-in return claiming the child and that the IRS will (in due course - many months) sort it out between my daughter and the father.

My daughter's refund will be severely delayed!!

Questions:

 - Will the IRS issue a refund to the father even though he has not submitted a 8332? Will his entire return be held up until this is sorted out by the IRS?

Thank you!

[Critter-3 · Accepted solution]

The answer is both returns will be processed and sometime in the future a year or two from now the IRS will send out letters to both parties because you claim the same child on two returns and will request the non-custodial parent to amend their return to remove the child and send back the money they should not have gotten. This could become a slug fest and very ugly so your daughter should keep accurate records of exactly when the child stays with her and the other parent so she can defend her right to claim her own child in the future. Her only option this year is to mail in the return to assert proclaim to the child and the child related credits.

[Critter-3]

Another thought, if she is court ordered to give him a signed 8332 and fails to do so she will be in violation of this court order. If the other parents said that the child live with him for only 4 months and he could not have claimed the child for had a household or earned income credit or the child Care credit. All of these still are retained by the custodial parent so she was supposed to give him an 8332 so he can claim the dependency exemption and the child tax credit then she should comply as the court ordered requires her to. She should still be able to claim the child for the head of household, earned income credit and child Care credit even if she doesn't get the child tax credit.