Oregon Tax Consultants Practice Exam

What is the purpose of Form 8332?

1. To report secondary income sources

2. To claim an additional child tax credit

3. To release the custodial parent's claim to a child tax exemption

4. To file for Innocent Spouse Relief

The correct answer is: To release the custodial parent's claim to a child tax exemption

Form 8332 serves a specific purpose in the context of tax filings related to dependents. It is utilized by the custodial parent to release their claim to the child tax exemption for a child to the non-custodial parent. This form effectively allows the non-custodial parent to claim the dependency exemption for that child on their tax return, provided they meet the necessary requirements established by the IRS. This procedural mechanism is especially useful in divorce situations or situations involving separation, where both parents may be involved in the lives of the child but have different financial responsibilities. By completing and signing Form 8332, the custodial parent formally acknowledges that the non-custodial parent is entitled to claim the exemption for tax purposes, which can result in financial benefits for that parent. The form is not intended for any aspects related to secondary income reporting, claiming additional credits unrelated to dependency, or filing for Innocent Spouse Relief, which are distinctly separate processes in tax law. This clear delineation of purpose is what establishes the relevance and necessity of Form 8332 in tax documentation regarding child dependency claims.