Can foster parent (grandmother) voluntarily transfer her right to claim child as dependent to biological parents via Form 8832?

[papajohn72]

Our 17-year-old child was court-ordered to foster care in 2017. My mother-in-law legally become the permanent foster parent for our child. She had physical custody of our child for all of 2018. Does this make her the custodial parent and my wife and I the non-custodial parents?

Also, she had offered to let us claim our child as a dependent for 2018 taxes (to help us out financially). Could this be accomplished via Form 8832, or is this not possible between a foster parent who's also a relative?

[macuser_22 · Accepted solution]

No.  The 8332 for is specific to parents who are divorced or separated and have not lived together for the last 6 months or the tax year.   It does not apply to anyone else.

To claim a child as a Qualifying child dependent the child must have lived with the taxpayer more than half the year OR must be supported by the taxpayer for the entire year to be a Qualifying Relative dependent.

However, if the child CAN be the Qualifying Child of any taxpayer that the child did live with  then that child cannot be a Qualifying Relative at all even it that tax payer does not claim the child.  i.e. a child that CAN be a Qualifying Child dependent CANNOT be a Qualifying Relative Dependent - the exception would be if the taxpayer that could claim the child does not have enough income to require filing a tax return at all.