Has anyone used the dependency exemption release form (Form 8332) successfully? My understanding is that if the custodial parent (parent with more custody nights) signs this form, it allows the non-custodial parent to claim the child tax credit. But does this also transfer all tax benefits like the earned income credit or head of household status?

I went through almost the exact same situation with my ex-husband three years ago. The communication issues and the "we'll see" responses sound so familiar! Here's what I learned from my experience and working with a tax professional: Since your parenting plan doesn't specify who claims your son, you're right that the IRS tiebreaker rules apply. With true 50/50 custody, it typically goes to the parent with higher AGI (your ex). However, there are a few strategies that worked for me: 1. **Document everything**: Keep a detailed calendar of overnight stays, not just the planned schedule. Sometimes the actual nights differ from what's written. If you can prove you had more nights, that trumps the income rule. 2. **Track all expenses**: Save receipts for healthcare, clothes, activities, school supplies, etc. While this doesn't change the legal right to claim, it's valuable evidence if disputes arise. 3. **Consider negotiation**: Even though your ex makes more, the Child Tax Credit might be worth more to you at your income level. You could offer to handle more expenses in exchange for alternating years or her signing Form 8332. 4. **Get legal help if needed**: If this becomes a pattern, modifying your parenting plan to include tax provisions might be worth the cost to avoid annual conflicts. The "first to file" approach creates more problems than it solves, so I'd avoid that route. Focus on documentation and see if you can work out an agreement for future years.

One thing nobody mentioned yet - when you mail in your paper return claiming the dependent that was already claimed, it will trigger what's called a "duplicate dependent investigation" automatically. The IRS will send notices to both you and the other party who claimed the child. Don't be alarmed when you get this notice! It's just part of the process. Make sure you respond to any IRS letters within the timeframe they specify (usually 30 days).

I'm going through something very similar right now with my nephew who I've had custody of for two years. His mom claimed him even though she hasn't seen him since last spring. One thing I learned is that you should also keep detailed records of things like school enrollment forms, medical appointments, and even grocery receipts that show you're buying food for the child. The IRS wants to see proof that the child actually lived with you and that you provided more than half their support. Also, if you have any documentation from social services or the court system about the foster placement, make sure to include copies of those with your paper return. The clearer you can make it that you're the legal caregiver, the stronger your case will be when they investigate the duplicate claim. Don't let the bio parents intimidate you out of claiming what you're legally entitled to. You're doing the right thing by fighting this!

I'm dealing with a similar situation right now! Just got quoted $950 for my return which includes one rental property and a K1 from a partnership investment. What really helped me was asking the accountant to break down exactly what they'd be doing - turns out they include a consultation about tax planning for next year and will handle any IRS correspondence if issues come up. When I compared that to cheaper options, some were just basic preparation with no ongoing support. I ended up negotiating down to $800 by agreeing to have all my documents organized digitally beforehand. Maybe try asking your accountant what's included in that $1200 and see if there's any flexibility based on how prepared your paperwork is?

Shop around for sure! I had a similar experience last year - first accountant quoted me $1,400 for two rental properties and a K1, which seemed crazy high. I ended up finding someone who charged $750 for the exact same work and did a great job. The key thing I learned is that pricing varies wildly between tax preparers, even for identical situations. Some charge per form, others have flat rates for complexity levels, and some just seem to charge whatever they think they can get away with. I'd recommend getting at least 2-3 quotes and asking each one to explain their fee structure. Also ask about their specific experience with rental property taxes - you want someone who knows the ins and outs of depreciation, passive activity rules, etc. Don't just go with the cheapest, but definitely don't assume the most expensive is the best either.

I understand the confusion about filing for a "dormant" entity, but think of Form 5471 like this: it's not just about reporting business income - it's about transparency. The IRS needs to know about ALL foreign entities controlled by US persons, even if they never operated. Your client was legally the owner/director of a Belize corporation from the moment it was incorporated until it was dissolved. That relationship triggers the filing requirement regardless of activity level. The good news is that most schedules will be straightforward since there were no transactions, funding, or operations to report. The penalty for not filing starts at $10,000 and can increase, so it's definitely not worth the risk. Plus, having a complete filing actually protects your client by creating a clear paper trail showing the entity's brief, inactive existence should the IRS ever have questions down the road.

Based on my experience with similar situations, your client definitely needs to file Form 5471. I had a client who formed an Irish company that never operated, and we initially thought we could skip the filing since there was no business activity. Big mistake - the IRS sent a notice about the missing form and we had to go through the reasonable cause process to avoid penalties. The key thing to remember is that Form 5471 is an information return, not just a tax return. It's required whenever a US person has the required ownership/control relationship with a foreign corporation, regardless of activity level. For your client's situation with the Belize corporation, even though it's being dissolved in the same year with zero operations, the filing is still mandatory. The silver lining is that with no funding, no business operations, and no income, most of the schedules will be very simple to complete. Just make sure to get proper dissolution documentation from Belize as others have mentioned, and file the 5471 with the client's personal return. It's much easier to file a simple 5471 now than deal with penalty notices later.

One important detail nobody's mentioned yet: if your refund is being offset, you should receive a notice from the Bureau of the Fiscal Service (BFS) explaining which agency is receiving the money and their contact information. This notice typically arrives AFTER the offset has occurred, which is why checking your transcript is so important. Did you receive any correspondence from the IRS or BFS about potential offsets before filing?

If you're planning for medical expenses and worried about offsets, I'd recommend checking multiple sources before counting on your refund money. Start with calling the Treasury Offset Program at 800-304-3107 (as Ava mentioned) - it's automated and quick. Then pull your transcript from irs.gov to look for those TC 898 codes. I learned the hard way last year that even if everything looks normal initially, offset codes can appear later in the process. For medical planning, it's better to assume the worst case scenario until you actually see the money in your account. The stress of unexpected financial changes when dealing with medical issues is awful - been there myself.