Form 8332

[SunTaxMan]

I have a client, non-custodial parent, who has a signed 8332 with "all future years" written in section 2.

Spouse, who signed the 8332 in 2003, is now claiming, on advice of spouse's lawyer, that the form is "not legal," and my client cannot claim the one dependent in question, simply because spouse is "objecting" and claiming, on advice of counsel, that the form is "not legal."

I don't see anything in the "fine print" to negate the existing 8332.

The other four dependency tests for exemption are met.

Comments?

Thanks,

[RoyDaleOne]

http://www.irs.gov/pub/irs-pdf/f8332.pdf

I appears that is what the instructions say how to fill out the form.

So, my comment is to agree with you. FWIW

[grandmabee]

its new this year

[RoyDaleOne]

What is new this year?

The 2003 Form also contained multiple year release provision.

[grandmabee]

its new this year

that you could revoke an all years release

[jainen]

>>I don't see anything in the "fine print" to negate the existing 8332.<<

An 8332 might indeed be invalid if what were written on the previous version did not conform to the substance of the updated version, or if it were improperly executed. It could be, for example, that the taxpayer never had an original signature. It would also no longer be valid if the child did not receive more than half of her current year support from one or both parents, which is easy enough to arrange with a little help from grandma.

Furthermore, Form 8332 can be revoked, and perhaps that is what the spouse is claiming [Reg. 1.152-4(d)(3)(i)]. I guess your client has a choice. He can give up the exemption, or he can fight over his kid. If he chooses the fight, make sure YOU document the eligibility for your own protection, and don't be surprised if the lawyer knows whatof he speaks.

[kcjenkins]

Yep, I think it's just the 'terminology' that is confusing the issue here. It's not that the form is 'illegal', it is just that even if she signed it originally for 'all future years' she is not actually BOUND by that, she can 'revoke' it at any time. so what was at fault, IMHO, was what the form implies. Especially since if you read the instructions on page 2, that 'Tip" actually warns "To help ensure future support, you may not want to release your claim to the exemption for the child for future years." But it still says

Custodial parent. You may agree to

release your claim to the exemption for

the child for the current tax year or for

future years, or both.

• Complete Part I if you agree to release

your claim to the exemption for the child

for the current tax year.

• Complete Part II if you agree to release

your claim to the exemption for the child

for any or all future years. If you do, write

the specific future year(s) or “all future

years” in the space provided in Part II.

[BulldogTom]

I would be very cautious about claiming the kid if the spouse has told your client they are revoking the release. I am not sure what the proceedure is to revoke (I think I heard it had to be in writing), but you have been notified that the release is in question. Preparing the return and including the child could lead to negligence penalties if the IRS knew you had knowledge that the release was revoked.

Not good for your client. I think he should talk to his counsel. But of course, that will cost him more than the tax value of the child.

Tom

Lodi, CA

[jainen]

>>I am not sure what the procedure is to revoke<<

Form 8332 can be revoked at any time PRIOR to the effective year, by delivering a new Form 8332 or written statement specifying the year or years of revocation. The custodial parent must continue to attach the revocation in every year to which it applies, and must maintain proof of delivery to the non-custodial parent.

This procedure is only a year old. Before that, there was no provision in the law, but following Chief Counsel advice the service used to honor a revocation if the non-custodial parent stopped claiming the child. So this is another possibility for why the lawyer now says the release is illegal.

In my opinion this is a situation that should not be driven by the tax effect. The value of a single exemption is pretty unimportant compared to family court proceedings. Since we don't really know the spouse's position, we can't offer specific advice. My general advice would be that there is usually not very much tax advantage in triggering an audit of your own return.