What say you?

[Dude]

A couple of tax professionals I know are encouraging clients who are not married, have children but not custody to get their children an IP PIN. Not for security against ID thieves but so they have leverage with the other child's parent. As we know shared custody situations get contentious at tax time and verbal agreements between the parents are often not honored. If the non custodial parent gets the ID PIN for their children then they can use it in their ALLOWED years to claim as the other parents return will be rejected without the PIN.

Problem I see, is that this may give too much power to the non custodial parent as they will get the new ID PIN even in years they are not allowed to claim and therefore must give this PIN to the other parent. ON the other hand, If they try to abuse this privilege by using it in years they are not allowed to claim, the custody agreement will protect the custodial parent IN THE END, but not before a bunch of aggravation is caused.

I know the default response will be to get an 8332 signed, but many times the custodial parent will resist signing this form. Again, divorced people are not known for cordiality at tax time so maybe the IP PIN could help the otherwise "powerless" non custodial parent?

[kathyc2]

Why would you want to interject yourself in the middle of such a situation?

[ATSMAN]

Kathyc2 is absolutely correct. Unless you have a desire to get burned stay away from these type of clients. Many years back I had a client who was playing games with the help of her attorney and finally it all exploded in their face. Unfortunately I was not aware of all the BS.

[spanel]

Also, how would you put an IP PIN in for a dependent?!?!?! I have only seen such for taxpayers/spouses.

Sounds like a terrible idea to try to save some preparer headache of sending the 8832

Chris

[TaxGuyBill]

Unless you the taxpayer is a victim of Idenity Theft or lives in selected States, they are not eligible for an IP PIN.

https://www.irs.gov/identity-theft-fraud-scams/frequently-asked-questions-about-the-identity-protection-personal-identification-number-ip-pin#q2

https://www.irs.gov/pub/irs-pdf/f14039.pdf

As for your comment about ""powerless" non custodial parent", they shouldn't be powerless. If the divorce attorney know what he is doing, the Form 8832 should have been signed in connection with that document. If the divorce attorney did not know what they are doing, then the non-custodial parent should correct the situation by going back to the court to have the custodial parent sign the form.

[Rapid Robert]

Also, how would you put an IP PIN in for a dependent?!?!?! I have only seen such for taxpayers/spouses.

Your professional software should support this. From the IRS web site FAQ:

"E-File Return: As of January 1, 2016, if you claim one or more dependents that have an IP PIN, you must enter their IP PIN on the following e-File tax forms:

• Form 1040, Individual Income Tax Return, series
• Form 2441, Child and Dependent Care Expenses
• Schedule Earned Income Credit

Your e-File return will be rejected if you fail to enter a dependent’s IP PIN."

Paper filed returns do not require the IP PIN entry, so that is how the situation would be ultimately resolved in favor of the parent who is actually entitled to claim the dependent. The IP PIN for a dependent really doesn't make the problem any worse than it already is.

Member Dude mentions "leverage with the other child's parent." and "too much power to the non-custodial parent", but doesn't explain what that means. Leverage for what? Too much power to do what?

[Burke]

As for your comment about ""powerless" non custodial parent", they shouldn't be powerless. If the divorce attorney knows what he is doing, the Form 8832 should have been signed in connection with that document.

Form 8332 can be used to release the exemption for future years, so that could have been designated. However, it also has an option to revoke the prior exemption for future years, so the custodial parent could do that as well. Either way, the courts are the way to resolve this issue if it is covered in the divorce decree (which the IRS will not honor as valid as to who claims.)

[Burke]

Paper filed returns do not require the IP PIN entry, so that is how the situation would be ultimately resolved in favor of the parent who is actually entitled to claim the dependent. The IP PIN for a dependent really doesn't make the problem any worse than it already is.

Even if the paper-filed return does not have a space for a dependent IP PIN, would not it still be in the IRS computer system? I would think that it would not be waived for processing just because the form has no place to put it.

[Dude]

Thank you all for your opinions. I would rather not interject myself in these situations but I deal mostly with lower middle income clients whose refund can be 30% of their annual income. Tax Planning (not just tax preparation as they usually get) has different nuances and variables for these folks than they do higher income individuals. I see I may be getting too creative. Thanks again.

[ATSMAN]

but I deal mostly with lower middle income clients whose refund can be 30% of their annual income.

I am assuming a significant amount of that is EITC?

I absolutely hate doing those returns because of the extra time required for the due diligence and the tendency of some taxpayers to "fudge"! The classic example is a single mother with cash income from house cleaning business!

[dmj4]

Sometimes, I am in awe of the creativity some folks have. I feel boring compared to these people. I still would not do this, though.