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Absent dad wrongly claims daughters as dependents
April 15, 2010 8:05 AM   Subscribe

How can this unfair income tax situation be resolved?

A dear 70-year-old lady in our office is raising her two teenage grand-daughters because their parents divorced and then their mother died, and their father didn't want to take care of them. She told me their father claims them as dependents on his income tax return but spends almost nothing on them, not even child support (?). She conscientiously doesn't claim them as dependents (since he does), even though she is providing all their care on her very small salary. How could she correct this? Is simply notifying the IRS enough?
posted by davcoo to Work & Money (12 answers total) 1 user marked this as a favorite
 
Here are the rules for claiming a dependent.

But your friend really needs to consult a tax specialist.
posted by contessa at 8:16 AM on April 15, 2010


Do they live with her? According to this, one of the criteria for claiming a child as a dependent is "The child must have lived with you for more than half of the year."

So, if they lived with the grandmother for more than half the year, she rightfully can claim them as dependents, period. What the father does is his business (or, more likely, tax fraud), but she should claim them as dependents because, as far as the IRS is concerned, they are.

I am not an accountant, tax preparer, lawyer, or anything but an anonymous stranger on the internet giving my interpretation of publicly-available information from the IRS website.
posted by The Michael The at 8:19 AM on April 15, 2010


In fact, the test to be a qualifying child doesn't even ask if someone else can claim them as dependents, so she should just claim them if they meet the criteria.
posted by The Michael The at 8:20 AM on April 15, 2010


The IRS has a whistleblower program, through which people can get rewards if the information they provide to the IRS results in collection of taxes, penalties, interests, etc. The award is mandatory only if the collected amounts exceed $2m and (or?) if the individual's gross income exceeds $200k (Which I am assuming would not be the case in your friend's situation), but there is a permissive award for other instances.

And unrelated, but why is she conscientiously not claiming them as dependents? It is her right to do that if she meets the requirement, and the fact that the father fraudulently claims them of course does not bar her claim.
posted by Pontius Pilate at 8:22 AM on April 15, 2010


Do they live with her? — Yes, for the past three years.

In fact, the test to be a qualifying child doesn't even ask if someone else can claim them as dependents, so she should just claim them if they meet the criteria. — I brought that up to her, showed her the IRS document that was linked to here, and she's going to go ahead and claim them.

And unrelated, but why is she conscientiously not claiming them as dependents? — She thinks she can't because their father does, but see above.
posted by davcoo at 8:27 AM on April 15, 2010


davcoo: How can this unfair income tax situation be resolved?


Your friend should claim them as dependents. Their father is treating her like a doormat.

contessa: But your friend really needs to consult a tax specialist.

I don't think so. The rules are pretty clear-cut about this. Unless the kids live with him for more than half the year, and (not or, AND) receive more than 1/2 of their financial support from him, he's not entitled to claim them. This is all spelled out very clearly in The Michael The's link.

Assuming that's the case (and that she can provide basic proof of their residence with her), she should claim them and not worry about what he's filing. Let the IRS worry about that.
posted by mkultra at 8:59 AM on April 15, 2010


Not only should she claim them for this year, she should amend her tax return for the last 2 years to include them as well. She'll have to be able to prove that she's had them if she gets audited though. If the father has already filed and used their SSNs, then the grandmother will not be able to successfully file electronically. She'll need to submit her return via paper. Once the IRS sees that the SSNs have been used by her and the father, they'll send out a letter to each of them saying essentially that one of you has to correct your tax return to not include the girls and adjust taxes accordingly. This may mean paying back refunded money. Since Grandma has had the girls, she SHOULD NOT send back money or be disturbed by this letter from the IRS. The father will need to be the one to do it. If an audit comes up, the party who can prove that the girls were there will be fine and the other may be facing fines and penalties.

To protect herself, Grandma should seek the services of a certified tax preparer.

*This is a summary of information I received in my foster parent monthly training. It was given to us from the certified tax preparer who works with our county's CPS agency. It is an issue for foster parents because we often have kids with us for more than 6 months and their families will routinely try to use their SSNs.
posted by onhazier at 8:59 AM on April 15, 2010 [2 favorites]


She also needs to investigate filing as head of household if she is single.
posted by Carbolic at 9:02 AM on April 15, 2010


Yeah, even if the documents (or situation) weren't as clear as they are, I would claim them as dependants anyway. The chances of getting audited are probably higher if they can catch the same person being claimed twice, but I think the person who is actually caring for them would "win" the audit.
posted by gjc at 9:47 AM on April 15, 2010


She should definitely file amended returns for the past three years (or whatever applies). I have been told by the IRS and a tax preparer that you can go back three years if you are due a refund and need to amend a past return. But yes, she should also consult with a tax preparer. It's probably fairly straight forward, though.
posted by JenMarie at 11:54 AM on April 15, 2010 [1 favorite]


Thank you, everyone.
posted by davcoo at 12:21 PM on April 15, 2010


So the grandmother is receiving the Social Security Survivor's Benefits on behalf of the children? Please don't tell me the father is. And she should know that if she hasn't been receiving the benefits she can receive the back payments that she qualified for in a lump sum.
posted by cda at 1:34 PM on April 15, 2010


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