Child support payments are tax-neutral in the United States. The recipient parent or the child could not claim such payments as income. Similarly, the non-custodial parent also would not be able to claim such payments as tax deductions. However, the tax laws of U.S. allow the non-custodial parent to fill out and attach IRS Form 8332 with the federal tax return, claiming the child as his/her tax dependent, if the child support payments exceed more than 50% of the living expenses of the child.
A custodial parent who desires former spouse or a separate guardian to claim his/her child on the tax return of the former spouse or the guardian should fill up IRS Form 8332 and submit it to Internal Service Revenue (IRS) of the United States. If you have already submitted such a form in the past and wish to start claiming your child in your tax return again, you should complete a new IRS Form 8332. You are allowed to delay filing your tax return or the tax return of the non-custodial parent or guardian, if the filing of IRS Form 8332 is not complete before filing tax returns.
Process of Submission of IRS Form 8332
- The first step in submission is to obtain the necessary agreement from the parent in custody of your child. The custodial parent should sign the release form available at the top of IRS Form 8332 in Part I. This signature indicates that the custodial parent allows the non-custodial parent of the child to make a claim in the present fiscal year as a non-custodial parent dependent. The custodial parent should date and sign Part I of the form after filling up the name of the child and the current fiscal tax year.
- It is also possible to obtain release of dependence claim of the child by the custodial parent for not only this fiscal tax year but for several future years also. This is only an option and you need not necessarily claim an exemption for the child for future years if the claim is for this year alone. However, with the mutual agreement of both parents, filling up this section makes it easy to have tax exemption releases on a long-term basis, if the non-custodial parent plans to provide more than 50% the living expenses of the child in future years also.
- If you feel that you might not be able to offer more than 50% of the expenses of the child in a particular year in future, you should fill out Part III along with the custodial parent. This is also purely optional.
- When you submit properly completed, you get the eligibility to claim the child as your dependent on your taxes. However, you should provide the social security number of the child, since the IRS usually cross-refers this information with the tax returns of both parents.
- You should also ensure that you attach all the necessary forms along with your IRS Form 8332 and mail them as a single package to the correct IRS office relevant to the submission of the form.
- The custodial parent furnishing release of the claim of the dependency of the child for future years should make adequate number of copies for possible future use. The custodial parent would be required to attach a copy of this release to all tax returns of future years for which the release exemption is applicable.
- It is possible to submit tax returns with IRS Form 8332 through e-filing.
- It is necessary that both parents do not simultaneously claim the child as a dependent, quoting its social security number. This could lead to serious IRS auditing, resulting in severe tax and IRS penalties.