Efile reject - help needed

[FEDUKE404]

Client filed MFJ, claiming college-age daughter as a dependent. There are no issues that would create problems re such an exemption. The parents paid virtually all support/college expenses for the daughter.

The dependent IS married (in name only) and currently, while attending college, living apart from spouse. (For all intents and purposes, the "temporary absence" rule while at college would apply here.) That situation will change after graduation and during 2012, when MFJ is expected.

The spouse filed married filing separately, claiming one exemption (his own). The client's dependent also filed married filing separately, claiming NO personal exemption (parents to claim for 2011.)

This is the efile error message obtained:

Rule Number: IND-512
Rule Number Explanation:
Each Dependent's SSN (or Qualifying Child SSN on Form 1040SS(PR)) on this return must not match the Spouse SSN on this return or another return.


I thought under these specific circumstances, the parents COULD rightfully claim the daughter as a dependent. Daughter has negligible (summer job) income and parents are in line for recovering full amount of AOC due to college expenses paid, in addition to the other tax benefits of the additional exemption.

As others have said - am I April brain dead now? - or simply missing something? Is there a theory error on my part, or just a procedural roadblock for efiling? H-E-L-P !!

Thanks!

FE

[dtlee]

Client filed MFJ, claiming college-age daughter as a dependent. There are no issues that would create problems re such an exemption. The parents paid virtually all support/college expenses for the daughter.

The dependent IS married (in name only) and currently, while attending college, living apart from spouse. (For all intents and purposes, the "temporary absence" rule while at college would apply here.) That situation will change after graduation and during 2012, when MFJ is expected.

The spouse filed married filing separately, claiming one exemption (his own). The client's dependent also filed married filing separately, claiming NO personal exemption (parents to claim for 2011.)

This is the efile error message obtained:

Rule Number: IND-512
Rule Number Explanation:
Each Dependent's SSN (or Qualifying Child SSN on Form 1040SS(PR)) on this return must not match the Spouse SSN on this return or another return.


I thought under these specific circumstances, the parents COULD rightfully claim the daughter as a dependent. Daughter has negligible (summer job) income and parents are in line for recovering full amount of AOC due to college expenses paid, in addition to the other tax benefits of the additional exemption.

As others have said - am I April brain dead now? - or simply missing something? Is there a theory error on my part, or just a procedural roadblock for efiling? H-E-L-P !!

Thanks!

FE

I doubt you are brain dead, but I would not be able to tell in my current state of mind (and you always sound good).

As I understand this error, it is something like this:

A dependent's Social Security Number cannot be used on another return as a Primary or Secondary with the associated Line 6a checkbox or 6b checkbox checked on that return.

Based on what you described, this is the situation and the error should not have occurred.

I think you need to recheck how the daughter and spouse actually filed. Assuming that everything you were told was believed to be true, the spouse may have used tax software that in an interview asked if his spouse had any income and if she was claiming her own exemption and he may have said "No" and it checked box 6b for him.

You probably need to see the actual returns they submitted. Otherwise, you need to talk to the IRS. I do not see how that reject could have occurred if all you were told is true.

[ChEAr$]

What FedDuke has experienced has happened before, and IRS hasn't addressed the issue yet apparently.

Simply file a paper return.
No form 8.. whatever needed as the return doesnt' qualify to be filed electronically.

[FEDUKE404]

The Oracle of the Efile has spoken

Response from efile middle man was as expected...

Are you sure no one claimed dependent? (Yes, I am.)

Was the spouse exemption box unchecked? (It was. Does MFS, one exemption, further clarify anything?)

Remove the dependent and efile the return. (Why would I need to do that?)

Later amend the return, add the dependent, and provide documentation that you can claim the dependent. ("ditto")

The IRS will review and determine who has the right to claim the child. (Well, it is a college-age student and the dependency exemption has been claimed on only a single tax return - that of the parents. Exactly what is there to "review"??)

I fear I am just stuck with a paper return and all the associated problems (a complicated return with a large refund being held in limbo).

Would a couple fingers of Jack Daniels help anything??

FE

[taxea]

My tax program will explain the error further by explaining what needs to be done but, the bottom line is that you need to see the actual tax returns that were filed by the others involved to verify they were done without taking this person as an exemption.
Either way take the exemption and let the IRS figure it out if no one is forthcoming with their return copies.

[FEDUKE404]

Nothing to repair

My tax program will explain the error further by explaining what needs to be done but, the bottom line is that you need to see the actual tax returns that were filed by the others involved to verify they were done without taking this person as an exemption.
Either way take the exemption and let the IRS figure it out if no one is forthcoming with their return copies.

Well, since I am the one who prepared all three tax returns....I already know what was/was not on them..........and I "figured it out" some time ago.

It appears I cannot "take the exemption" via efile, even though NO ONE has attempted to claim the dependent as an exemption other than the parents, whose efiled return has been, and will apparently continue to be, automatically rejected due to a non-existent conflict.

FE

[taxea]

Have you alerted the IRS to this glitch? I would be curious to know their reasoning. Is it because the ex showed the wife's SSN on his return as required? If you did his MFS return then you know that the box to take her as an exemption was not checked. Not being able to efile doesn't make sense.

[Koss]

Known Issue

I can't provide any kind of citation or documentation, but this sort of issue has been around for years.

The dependent in question is identified as the spouse, with her SSN, on her spouse's return. It is that return, not the dependent's own return, that is causing trouble.

The error code you got makes no reference to exemptions, or to box 6a or 6b. It simply says that a dependent's SSN cannot be the spouse's SSN on another return.

The IRS algorithm doesn't look at whether the person claimed a personal exemption. If a dependent's SSN is the spouse's SSN on another return, then the person claiming the dependent can't file their return electronically and claim the dependent.

No, it doesn't make sense. It doesn't have to make sense. You're dealing with the IRS.

BMK

[FEDUKE404]

It's an efiling screening problem

I can't provide any kind of citation or documentation, but this sort of issue has been around for years.

The dependent in question is identified as the spouse, with her SSN, on her spouse's return. It is that return, not the dependent's own return, that is causing trouble.

The error code you got makes no reference to exemptions, or to box 6a or 6b. It simply says that a dependent's SSN cannot be the spouse's SSN on another return.

The IRS algorithm doesn't look at whether the person claimed a personal exemption. If a dependent's SSN is the spouse's SSN on another return, then the person claiming the dependent can't file their return electronically and claim the dependent.

No, it doesn't make sense. It doesn't have to make sense. You're dealing with the IRS.

BMK

Koss,

I think you have nailed it squarely.

My original concern was my "theory" had gone in the ditch, but it appears now there is nothing "wrong" with the actual parental tax return and the only reason it cannot be efiled is that the IRS has an intercept in place that will automatically block a person being allowed as a dependent if that same SSN also appears on another return as a "married person." This is a totally different situation from the more common reject of "someone has already claimed that person as a dependent."

The two MFS returns for H/W have both been efiled/accepted by the IRS. Husband claimed one exemption (his own) and wife claimed no exemption (to be claimed in 2011 by parents).

My theory is good - the IRS processing is bad - so a paper return has been sent to Kansas City in a very large envelope.

But, I guess this scenario is to be expected from the same IRS that allowed a bunch of AOC credits to 10-year-olds.

FE

[KathMorgan]

One thing I haven't seen anyone mention....

The one additional caveat to the dependent MFJ situation that I have seen mentioned. I know you probably have it under control, but, did either of the kids on their joint or MFS returns have any kind of taxable income after deductions? If so that would exclude the spouse from being claimed by the parents. Just a thought.

Kathy

[dtlee]

I agree that the line 6a/6b boxes are not referenced by this error as I misstated above based on my reading of the older rules. Thank you, Burton, for correcting me.

I think that FE's theory is correct and that this is somehow improperly (or perhaps overzealously) applied by the IRS in their MeF processing.

Take a look at this "crosswalk" document which the IRS provides with their MeF Business rules and how they relate to general reject codes:

https://www.irs.gov/pub/irs-utl/ty_2011_crosswalk_form_1040.pdf

Note on page 43 (no, they don't number this document) for ELF ERC 510 where this error is described as:

Primary SSN (SEQ 0010) and/or Secondary SSN (SEQ 0030) where
the SSN was claimed as an exemption (SEQ 0160) and/or (SEQ
0163) on the return and was also used as a Dependent’s SSN on
Form 1040 Qualifying Child on Form 1040-SS (PR) (SEQ 0175,
0185, 0195, 0205) on another return.

Dependents's SSN (SEQ 0175, 0185, 0195, 0205) was used as a
Primary SSN (SEQ 0010) or Secondary SSN (SEQ 0030) on
another return and was claimed as an exemption (SEQ 0160) on that
return.

On the right, they impose the rule on the individual returns of the parents and dependents slightly differently.

The rules marked {Form #}-512 specifically indicate that the exemption must be claimed for this reject, but the one marked IND-512 does not require this. From my reading of this, it appears that it would only reject if the parents' return is filed after the dependent's return since there appears to be no similar reject on the dependent returns (those all seem to require the 6a/6b box to be checked to reject them).

[FEDUKE404]

Rules allow tax scenario but just not efiling

The one additional caveat to the dependent MFJ situation that I have seen mentioned. I know you probably have it under control, but, did either of the kids on their joint or MFS returns have any kind of taxable income after deductions? If so that would exclude the spouse from being claimed by the parents. Just a thought.

Kathy

The "kids" are adults (well, at least over 21). Both/ had taxable income on their MFS returns.

In and of itself, that does not preclude the parents from claiming the dependent daughter assuming (primarily) they provided more than 50% of her support during 2011. That fact is undisputed.

FE

[Koss]

Joint Return Test

The one additional caveat to the dependent MFJ situation that I have seen mentioned. I know you probably have it under control, but, did either of the kids on their joint or MFS returns have any kind of taxable income after deductions? If so that would exclude the spouse from being claimed by the parents. Just a thought.

Kathy

Kathy, you are thinking of the joint return test. The rule is that you cannot claim a person as a dependent if that person filed a joint return, unless the return would have no tax liability even if it was MFS, and the return was filed only to claim a refund of tax withheld..

But in this case, the dependent did not file a joint return, so this rule is not applicable.

This has got to be one of the most confusing rules out there.

BMK