Julie was divorced on December 1, 2017 and is the custodial parent of the children. She...

Julie was divorced on December 1, 2017 and is the custodial parent of the children. She receives alimony from her spouse which she uses to maintain the household for her and her children. The divorce decree states that her husband will take the dependents and she signs form 8332 accordingly. She has no other dependents for tax purposes. What is her optimal filing status and number of dependents in 2017?

Expert Solution

Form 8332.

As per IRS, if you are the custodial parent, you can use this form to do the following.

Release a claim to exemption for your child so that the noncustodial parent can claim an exemption for the child.
Revoke a previous release of claim to exemption for your child.

Since, she signed the form 8332 and so now her husband will take the exemption of their children.

Now as per IRS, Your filing status is determined as of the last day of the calendar year. You are considered unmarried for the whole year if, on the last day of your tax year, you are unmarried or legally separated from your spouse under a divorce or separate maintenance decree. Your filing status will be either single or head of household.

She can file status as head of household if:-

You are unmarried or considered unmarried on the last day of the year;
You paid more than half the cost of keeping up a home for the year;
A “qualifying person” lived with you in the home for more than half the year; and
You must be able to claim an exemption for the child. You meet this test even if you waived the right to claim the child and filed Form 8332.

So, over here all of the above conditions are fulfilled by Julia.

So, her filing status is "HEAD OF HOUSEHOLD". And number of dependents - NIL because her spouse will take dependents on his tax return.

ekkarill92 answered 1 year ago

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