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Unmarried Parents with Child

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    Unmarried Parents with Child

    August 9, 2018
    I have a situation with the following facts:
    Two unmarried individuals have child and they all live together. The mother filed single (2015 & 2016 tax years) and claimed child as a dependent. Mother did not attach Form 8332 to her 2015 & 2016 tax returns. The father is the custodial parent because he has a higher AGI. The father has not filed his 2015,2016 & 2017 tax returns. Father would like to file as Head of Household. Does the fact that all live together disallow the custodial parent to waive the dependency exemption and child tax credit? If not, can the mother amend her returns to attach Form 8332 to her 2015, 2016 tax returns? It appears that the proposed regs allow for attaching form 8332 to an amended return

    My thoughts:
    1. Sec. 152(e) allows the custodial parent to release a dependency exemption to a noncustodial spouse. However, I do not think that applies because both are custodial parents.
    2. I think the mother would have to amend her 2015 & 2016 returns for the father to file as HOH, resulting in the mother filing as single. If the mother amends her returns, all tax benefits for the child would be allowed for the father and HOH status.
    3. IRS Pub 17, Example 8, allows the person with the higher AGI to allow the other parent to claim a child as a qualifying child and all other child tax benefits when both parents are unmarried. In this situation, the father would have to file as single, as he has no dependent for HOH.
    4. This needs an analysis of which taxpayer benefits the most from the child’s exemption and related child tax benefits and file it that way.
    5. What are your thoughts?

    I agree with all of your thoughts (1-4). If both parents agree, either parent can claim the child (no Form 8332 is needed), but it dad claims child (and Head of Household), the mom needs to amend.


      Can of worms

      Things I DON'T miss by no longer working with a store-front tax organization. . . .

      While OldProfessor seems to have a good grasp of the rules, the "solution" is definitely fraught with problems.

      Issue #1: Why has dad not bothered to file any tax returns in recent years? Unpaid taxes? Unpaid child support? Unpaid whatever? My awareness level always goes (went?) up whenever I was suddenly presented with a client who decided it was finally time to file some original returns for years gone by.
      Issue #2: Assuming mom claimed child and (likely) EITC, straightening out her situation via amended returns might be. . .co$tly and unplea$ant !

      Oh yes: You probably will have to deal with all of the relevant Obamacare "issues" for both parties.

      Also, before you progress too far, you probably should do a detailed review of Form 8867 which will be required!

      AND collect a meaningful up-front payment before you perform any work on the tax returns involved!!

      Have fun.

      Last edited by FEDUKE404; 08-10-2018, 05:18 PM.