Form 8332 Release of Exemption

[Chowdahead]

A client came in with a copy of her 2007 return which was prepared by the local IRS office. She releases her son as an exemption on the father's return (they are not married). She claims the other child they have. I've only seen this twice in 5 years.

What I found interesting when reviewing the 2007 return was that the IRS agent listed the both the children on her EIC Eligibility Sheet. She also received a bump in her EIC and additional child tax credit as a result. However, only the child she is claiming is listed on the front of the return, and she only received the exemption for her and her child listed on Page 1.

For 2008, I entered in both children on the dependent input sheet, but for the child she is not "claiming" this year, I checked the box that says "do not claim this child this year". Once this box is checked, the unclaimed child is removed from Page 1 of the 1040, but is still listed on the EIC page. There is also a similar bump in her EIC and Additional Child Tax credit amounts, similar to her 2007 IRS-prepared return.

I just want to make sure this is not a glitch in the program or anything. I'm still wrapping up a few other things on the return. So releasing the "exemption" does not affect a person's EIC and other child credits correct?

[TAXBILLY]

http://www.irs.gov/individuals/article/0,,id=96406,00.html

taxbilly

[David1980]

Yup, it's all OK. If you have clients that you've not been giving EIC for the second child for a custodial parent get some amendments done and make your customers love you.

In divorced or separated parent situations the custodial parent can *always* use the child for HOH, EIC, and Child & Dependent care expense. (And some other stuff, like medical expenses iirc. But those are the big 3.) The non-custodial parent with proper release of exemption from custodial parent can claim the exemption, child tax credit, and some other stuff (like education credits.)

Note that these special rules are only available for divorced or separated parents.

[Chowdahead]

Thanks for the responses. No amendments needs since I just sent the return. I checked the last return I did 5 years ago and it did not have an affect on the return.