Rejected return -- dependent fraudulently claimed

[JohnH]

Exactly

?..I have not yet heard from a reliable source that the IRS "wants parents to work out their own differences." They might prefer to do this, but I don't see how they can. If the parents were willing to "work out their differences" these things wouldn't be happening to begin with.

How true...!

[okie1tax]

Other claimed kid

How does your guess as to someone claiming your child going to make ANY difference IF it was not that someone who did, in fact, claim the child on their tax return? What possible benefit have you accomplished by naming someone who is innocent of wrongdoing? Even if you know who wrongly claimed your child, if YOU cannot prove that YOU are entitled to the exemption you have not gained anything.

[JohnH]

After giving your questions some thought, I'd suggest the following:
1) Most people probably do know who likely claimed their child as a dependent. It's either a former spouse/live-in or someone else known to them.
2) If it is someone else, that might provide IRS valuable info on an identity theft matter.

However, to avoid making a rash statement, it probably would be wise to say something along the lines of "I think this person may have misunderstood the rules and claimed the exemption in error" rather than "the deadbeat did it again".

The desired objective of course is to get moving on the refund, so as you say the one who actually supported the child will eventually have to establish the facts.

[ChEAr$]

Two thoughts come to mind, though. 1) The wording should probably be vague enough not to be construed as an accusation. 2) Would it be wise to include the Social Security number of the ex (if known)?

I wouldn't even bother to recommend to client she actually name the cad, much less provide SSN if known. SOunds too much like sour grapes.

[okie1tax]

Other claimed child

What i hinted at is, the IRS ALREADY knows who claimed the child, that's the reason your return rejected. All you have to do is prove that YOU are the taxpayer entitled to the exemption.

[Bees Knees]

Can you cite some reasonable reference supporting this position?

"But I've heard lately that the IRS wants parents to work out their own differences and leave the IRS out of the decision-making, meaning the 1st parent to get his/her W-2 is the winner."

FE

However, I have not yet heard from a reliable source that the IRS "wants parents to work out their own differences." They might prefer to do this, but I don't see how they can. If the parents were willing to "work out their differences" these things wouldn't be happening to begin with.

The "work out their own differences" is a concept that came from the Uniform Definition of a Qualifying Child rule, which is actually in the Code. Section 152(c)(4), referring to the tie breaker rules says: "More than 1 parent claiming qualifying child. If the parents claiming any qualifying child do not file a joint return together, such child shall be treated as the qualifying child of..."

The Code refers to both parents claiming the child. Thus, if only one parent claims the child, that parent gets the deduction, even if the other parent is entitled to the deduction. In essence, parents can decide which parent gets the child by agreeing to only have one parent actually claim the child. If they can't agree and both go ahead and claim the kid, then the Code takes over with the tie breaker rules.

This concept was first introduced in 2004 when the Uniform Definition of a Qualifying Child concept was first introduced. Prior to that, the Code gave the dependency exemption to the parent providing over 50% of total support. For divorced or separated parents, the custodial parent was considered to be the parent who provided over 50% total support, unless he/she signed over the exemption to the noncustodial parent, or there was a multiple support agreement, or there was a pre- 1985 divorce degree in which the noncustodial parent provided at least $600 of support. There was no concept of a tie breaker rule. You either met one of the above rules, or you didn't.

[FEDUKE404]

First in issue

The "work out their own differences" is a concept that came from the Uniform Definition of a Qualifying Child rule, which is actually in the Code. Section 152(c)(4), referring to the tie breaker rules says: "More than 1 parent claiming qualifying child. If the parents claiming any qualifying child do not file a joint return together, such child shall be treated as the qualifying child of..."

The Code refers to both parents claiming the child. Thus, if only one parent claims the child, that parent gets the deduction, even if the other parent is entitled to the deduction. In essence, parents can decide which parent gets the child by agreeing to only have one parent actually claim the child. If they can't agree and both go ahead and claim the kid, then the Code takes over with the tie breaker rules.

This concept was first introduced in 2004 when the Uniform Definition of a Qualifying Child concept was first introduced. Prior to that, the Code gave the dependency exemption to the parent providing over 50% of total support. For divorced or separated parents, the custodial parent was considered to be the parent who provided over 50% total support, unless he/she signed over the exemption to the noncustodial parent, or there was a multiple support agreement, or there was a pre- 1985 divorce degree in which the noncustodial parent provided at least $600 of support. There was no concept of a tie breaker rule. You either met one of the above rules, or you didn't.

Your points are, of course, quite accurate re issues related to the Uniform Definition rules.

My main question was related to what was highlighted in blue (which would indicate there had been NO compromise but rather two conflicting claims for the same dependent).

I guess it depends upon one's definition of "winner," but I did intend to raise a question concerning just because person A files first, that person A will eventually be declared the "winner" by the IRS. I seriously doubt if that is the guideline the IRS follows when multiple persons attempt to claim the same dependent.

FE

[taxea]

That's an interesting idea, that the paper return should include a statement of who else the taxpayer believes claimed the dependents. That sounds like good advice to me.


In my experience, the IRS might determine that it is proper to ask BOTH parties to provide certain documentation, for example, to show who qualifies as a custodial parent.


I don't believe anyone has said that he submitted any signed 8332. In some cases I have seen, it is open to question who is the custodial parent.

I understand that but if it is required either someone signed it or the preparer didn't ask the right questions.

[taxea]

How does your guess as to someone claiming your child going to make ANY difference IF it was not that someone who did, in fact, claim the child on their tax return? What possible benefit have you accomplished by naming someone who is innocent of wrongdoing? Even if you know who wrongly claimed your child, if YOU cannot prove that YOU are entitled to the exemption you have not gained anything.

I would call it an educated guess based of facts the client may have. If you are right it verifies the name on the offender's return and gives the IRS knowledge they may not have had. As a former investigator I don't think the IRS would waste their time if the named person/s are not the ones who filed the fraud return.