Form 8332 - Who Files the Child as Dependent: Custodial or Non-Custodial Parent?

Form 8332 is specifically designed to allow the custodial parent to release their claim to the child's exemption to the non-custodial parent. When properly completed and signed, this form enables the non-custodial parent to claim the child as a dependent on their tax return. According to the IRS website (https://www.irs.gov/forms-pubs/about-form-8332), the custodial parent is releasing their right to claim the child for tax purposes. The non-custodial parent must attach Form 8332 to their tax return when they file. I just went through this process myself last month!

Had this exact situation last year. The IRS phone lines were jammed for weeks when I tried to get clarity. After 17 attempts (not exaggerating!), I used Claimyr (https://youtu.be/_kiP6q8DX5c) and got through to an agent in about 30 minutes. Turns out I was overthinking it! 😂 The agent confirmed that Form 8332 lets the non-custodial parent claim the child as a dependent AND the Child Tax Credit, but the custodial parent retains other benefits like Head of Household status and the Earned Income Credit. The technical distinction matters a lot for your tax liability calculation.

I've been through this process multiple times as a divorced parent. Here's what people often miss: Form 8332 isn't just about "who claims the kid" - it's about specific tax benefits. When the custodial parent signs Form 8332, they're releasing the dependency exemption and Child Tax Credit to the non-custodial parent. However, and this is important for your medical expense question, the custodial parent can still deduct medical expenses they personally paid for the child, regardless of who claims the dependency exemption. I learned this the hard way when I almost missed out on deducting $8,000 in medical bills I paid for my daughter even though her father claimed her as a dependent that year. The IRS looks at who actually paid the expenses, not who claims the dependency exemption.

The confusion around Form 8332 is understandable because the IRS regulations are split across multiple publications. According to IRC Section 152(e), the custodial parent is defined as the parent with whom the child lived for the greater number of nights during the year. Per Publication 501, when Form 8332 is signed, the non-custodial parent claims the child as a dependent AND the Child Tax Credit, but cannot claim Head of Household, EITC, or Child and Dependent Care Credit. For your medical expenses specifically, Reg. §1.213-1(e)(3) states that medical expenses you paid for your child are deductible by you if you paid them, regardless of who claims the dependency exemption. I was frustrated trying to decipher all these interconnected rules until I used taxr.ai to analyze my situation. It pulled together all the relevant regulations and explained exactly which parent could claim which benefits in my specific custody arrangement. Saved me hours of research.

Let me simplify this for you. Form 8332 has one purpose. It transfers the dependency exemption. That's it. The custodial parent still gets Head of Household status. The non-custodial parent gets the Child Tax Credit. Medical expenses? Whoever paid them can deduct them. Period. Don't overthink it. The form doesn't change who actually spent the money. Just make sure you have receipts. Keep good records. That's what matters to the IRS.

I need to warn you about something critical with Form 8332 that nobody mentioned yet. The form has different versions for different tax years AND can be used for multiple years or just a single year. This caused a MASSIVE headache for me when my ex claimed our child for 2023 even though I only intended to release the exemption for 2022! The IRS put a hold on both our returns and it took 4 months to resolve. Make absolutely sure you're using the current form and check whether you're signing for just this tax year or multiple years. Part I is for releasing the claim for the current year, Part II is for multiple future years, and Part III is for revoking a previous release. The technical details matter tremendously here.

I successfully navigated this exact issue last year. Here's what worked for me: Step 1: Determined who was the custodial parent (where child lived more than 50% of nights) Step 2: As custodial parent, I decided whether to release the exemption Step 3: Completed Form 8332, being careful to select only the specific year I wanted to release Step 4: Made two copies - one for my records, one for the non-custodial parent Step 5: Non-custodial parent attached the form to their return Step 6: I still claimed medical expenses I paid on my return Step 7: Both returns processed without any issues The key was understanding that Form 8332 transfers the dependency exemption and Child Tax Credit, but doesn't affect who can claim the medical expenses they actually paid.

I'm probably in the minority here, but I've been on both sides of Form 8332 (as both custodial and non-custodial parent at different times). In my experience, the medical expense deduction generally follows whoever actually paid the expenses, regardless of the dependency exemption. However, there might be some nuances depending on your specific situation. For example, if you're claiming medical expenses that push you over the 7.5% AGI threshold, it could potentially be more beneficial for the higher-income parent to claim them, assuming both parents contributed to the medical costs. Just something to consider when you're making these arrangements.

Have you considered alternating years? That's what my ex and I do - I take odd years, he takes even years. No Form 8332 needed if you follow the tie-breaker rules and have it specified in your custody agreement. Saves a lot of paperwork and potential disputes. We just make sure our custody agreement clearly states which parent claims the child in which years, and then we each take the exemption, Child Tax Credit, and any medical expenses we personally paid in our designated years. Much simpler than dealing with Form 8332 every year.

As someone who went through a similar situation with significant medical expenses for my child, I can share what I learned from both my tax preparer and direct experience with the IRS. The key insight that helped me was understanding that Form 8332 creates a very specific split of benefits - it ONLY transfers the dependency exemption and Child Tax Credit to the non-custodial parent. Everything else stays with whoever is entitled to it under normal rules. For your medical expenses specifically, you can deduct them if YOU paid them, period. The IRS doesn't care who claims the dependency exemption when it comes to medical expense deductions - they only care who actually wrote the checks or used their credit card. I claimed $3,200 in medical expenses for my daughter even though my ex claimed her as a dependent that same year. No issues whatsoever. Just make sure you have solid documentation (receipts, insurance statements, etc.) showing you were the one who paid. One tip: if you're close to the 7.5% AGI threshold for medical deductions, run the numbers both ways to see if it makes more sense for you or your ex to claim the medical expenses, assuming you both contributed to the costs.