Why Is My Tax Preparer Asking Me Such Nosy Questions?

January 7, 2014 by · 4 Comments
Filed under: Earned Income Credit 

Photo by Asterios Marias at Flickr.com


I took a phone call from a fellow awhile back who was absolutely furious about some of the questions his tax preparer had asked him.  The preparer had asked a whole bunch of questions about his kids and even asked to see their report card from school.  He said, “My daughters are 4 and 2 years old.  They don’t even go to school yet!”


So what’s going on here?


It’s all related to an IRS form—# 8867.  Form 8867 has to be filled out and sent in with every tax return that has the Earned Income Tax Credit.  Now, this form has been around for awhile, but it used to be that a tax preparer was just supposed to ask some questions and you’d keep that information to yourself.  Now, the IRS expects you to send the form in with the tax return.  If a tax preparer doesn’t complete the form and send it in with an EIC return—the IRS charges a $500 penalty to the tax preparer.



That’s $500 per return.  You miss too many of those and you could be out of business.    For most preparers, that’s more than what we charge to prepare an EIC return.


Now if you prepare your own tax return, you don’t have to worry about form 8867, it’s only for paid tax preparers.  But if you have your taxes done at H&R Block, or Jackson Hewitt, or even me—that form must be completed, and signed, and sent with your tax return.  (If your tax return is e-filed, we are required to keep the signed copy in our files.)


And the form seems to ask for more and more information every year.  Now there’s a whole section about documents:  documents to prove your kids live with you, documents to prove a disability, and documents to prove self-employment income.   Tax preparers are now expected to look at a taxpayer’s documents to verify the information on an EIC tax return.  School records, like report cards, are usually the easiest thing to use for documentation.  Of course, report cards aren’t very helpful when your children aren’t in school yet.  No documents, no form 8867.  No form 8867, no tax return.  No tax return, no refund.


It’s like the IRS is trying to turn regular tax preparers into the EIC police.  It’s not a job we asked for, but it’s a regulation that we’re required to enforce.  The penalties are so stiff that we’ll all be out of work if we don’t go along.


So remember, if you tax preparer asks to see your child’s report card, he doesn’t care if your son got a D in math or is a straight A student;  he’s just trying to help you get your refund.

Common Law Marriage and Your Tax Return

June 14, 2013 by · Leave a Comment
Filed under: Divorce, Earned Income Credit, Family, Taxes 
The married couple

Photo by Carrie Phisher on Flickr.com.

I often get contacted by people who are facing an audit based upon their “family relationship.” The IRS will send an inquiry about a person’s relationship to a child in an EIC claim and the person being audited will say that he or she is “common law” married to the child’s birth parent.

Here’s the thing: the rules for common law marriage are very specific. I know that a lot of people seem to think that a couple is common law married if they live together for seven years. That’s just not true. (I used to believe that too, it’s something I was told when I was a kid.)

But in reality, there are only certain states that recognize common law marriage. If a couple is deemed common law married in one of those states and then move to a non-common law marriage state, the new state still has to recognize the marriage.

In most common law states, you can’t just say you’re married, you have to “hold yourself out to be married”. For example: you call yourselves husband and wife, you file joint income tax returns, you use the same last name.

If you have a common law marriage, and you end your relationship, then you must get a divorce even though you never had a wedding.

If you’re going to argue to the IRS that you have a common law marriage, you need to know the facts. First, you need to know which states recognize common law marriage in the first place:

  • Alabama
  • Colorado
  • District of Columbia
  • Georgia (if created before January 1, 1997)
  • Idaho (if created before January 1, 1996)
  • Iowa
  • Kansas
  • Montana
  • New Hampshire (but only for inheritance purposes, this won’t work on your tax return)
  • New Mexico
  • Ohio (if created before October 10, 1991)
  • Oklahoma (but there’s conflict in the courts, marriages created before November 1, 1998 are recognized, common law marriages after that date may not be recognized)
  • Pennsylavania (if created before January 1, 2005)
  • Rhode Island
  • South Carolina
  • Texas
  • Utah

If you live in one of these common law states, you will need to check with your state to find out the rules that make you qualify as married. This link gives you an outline of some of the state requirements. http://www.uscis.gov/ilink/docView/AFM/HTML/AFM/0-0-0-1/0-0-0-26573/0-0-0-30679.html

Common law marriage is not to be taken lightly; it’s marriage. Before you use the common law marriage argument with the IRS, make sure you’re serioius about being married.

***Roberg Tax Solutions EITC Special Offer***

December 18, 2012 by · Leave a Comment
Filed under: Earned Income Credit 


EITC Special (February 2013)

Roberg Tax Solutions is offering a limited time, special deal on tax returns with an Earned Income Tax Credit.


This special price is only available to the first 200 people who make an appointment for this special offer, and is limited to February 1, 2013 – February 28, 2013.


For this time, we will offer our full service tax preparation services to our wage earning EITC clients for $200; that includes the cost of a bank product and all state returns.   A bank product means that we take your payment out of your tax refund.  You may either have your refund direct deposited into your bank account, or we can print a check in our office for you to pick up later.  This works out to be a $50 to $75 savings off of our regular price depending upon your tax return.


This is a great savings from those other big ticket tax companies.


If you are self employed, for this special offer, we will prepare your EITC tax return for $350 including a bank product.  That’s a $150 savings off of our regular price.


We do not provide Refund Anticipation Loans—that is, we don’t do fast refund money.  Your refund will come after the IRS funds the money to the bank which generally is expected to take 21 days.  If you have had problems with other people claiming your children on tax returns, this could take as long as 75 days.


What are the rules?  You must legally be able to qualify for the Earned Income Tax Credit and you must provide the necessary documents that are required in the new IRS regulations.  We will be making copies of all of your documents and we are required by law to hold copies of those documents for three years.


You will need to bring the following paperwork with you to your appointment:


  • Social security cards for every person listed on your tax return
  • W-2s
  • 1099-MISC forms
  • Any other income documentation
  • Proof of your child’s residency such as recent school report cards or medical statements
  • Proof of self employment income (if relevant)
  • Driver’s license or other state issued photo ID


For more information on documentation, read our post about the new EITC rules:  http://robergtaxsolutions.com/2012/11/what%e2%80%99s-new-with-the-earned-income-tax-credit-you-need-to-know-this/


This offer is limited to persons who can come to our office in person.  We will not do EITC returns over the internet.  (Sorry.)


If we discover that you are not eligible to claim an Earned Income Tax Credit, we will return your paperwork and you will be under no obligation to file your tax return with Roberg Tax Solutions.  Of course, if you still choose to file with us, we’ll be happy to have you as a regular client—in which we have another offer for you on our special offers tab.


If you’ve been filing your tax returns with some cattle call tax office that treats you like a number instead of a person, maybe it’s time to try something different.


Call today to set up your appointment.  (314) 275-9160 or visit www.robergtaxsolutions.


***Roberg Tax Solutions EITC Tax Return Special Offer***

Can I Claim EIC if I Don’t Have a Job?

December 4, 2012 by · Leave a Comment
Filed under: Earned Income Credit 


The short answer is no.  But I’ve had about 10 phone calls or emails this week with this question, or something similar anyway, so I figured I should post something about it so people will understand it better.


First, EIC stands for the Earned Income Credit (or some people call it EITC for Earned Income Tax Credit, they’re the same thing.)  The key phrase here is “Earned Income”.  You earn income from a job—like working at Target, or you might be self employed like me.  I own my business so I don’t get a W2 but I still earn income.


Social security, welfare, child support, food stamps, VA benefits, SSI, and gifts from friends or family—none of those count as earned income.  Neither does bank interest, stock sales or dividends, or rental income.  As far as the IRS is concerned, these things do not count as “earned income” for EIC.  (I know those Smith Barney commercials say they “earn” their income, but if you’re making money in a Smith Barney account—it doesn’t get you anything for EIC either.)


Alimony—does count as earned income for EIC.  Don’t confuse child support with alimony.  Child support ends when your kids grow up.  Alimony lasts forever or has an end date that has nothing to do with children.  Most people get child support, alimony is pretty rare these days.


So if you have a job that gives you a W2—you’re set because the W2 proves your income.  If you get alimony, that’s proven by your ex claiming the alimony expense on his tax return.  But if you’re self employed—proving your income is harder.


This year, the IRS is demanding that tax preparers have proof of your self-employment income before we can file your EIC tax return.  We’ll be fined $500 per return for not having that information.  So if you don’t have good records of your income, you might get turned away by your tax preparer.


So the obvious question is—what records do you need to prove your income?  The IRS has a list that includes the following:  a business license, 1099MISC forms, records of gross receipts, income summary, expense summary, and bank statements.


The 1099MISC is really the best proof of income if you receive those.  1099MISC is given to anyone performing work for a small business that got paid over $600 during the year.  If you’re like me, you don’t get 1099MISC forms.  Most of the work I do is for individual people, not businesses so I need to prove my income another way.  But I’m an accountant—I have all the bank statements and business records and a license to back up my income.  It’s what I do for a living.  Not everyone is going to have my kind of records.


What do you do if you just clean Mrs. Jones’ house for $50 a week?  Or, maybe you helped paint Mr. Anderson’s garage for $200 last spring.  It’s all cash, you’re just helping out.  Those don’t seem like they’re really jobs but they are.  If Mrs. Jones gives you $50 a week for the whole year, then that’s $2,600.  Add Mr. Anderson’s $200 and you’ve got $2800.  It’s not much but it’s something.


If you’ve been doing odd jobs like that, you’ll need to get some kind of documentation.  Put it in writing and have the people you worked for sign it.  In the future, you should keep a log of every place you work:  the date, the location, the person you worked for, and the type of work you did.


You can’t make stuff up!  That’s illegal.  And remember, EIC returns with self-employment are an audit target—if you lie about this stuff there’s a really good chance that you’ll get caught.


But, if you really did work and you really do deserve to claim EIC, then you should be claiming it.  You just need to make sure that you’ve got your documentation in order so you can prove it.


The IRS has a website full of information about EIC.  Check it out:  http://www.irs.gov/Individuals/EITC-Home-Page–It%E2%80%99s-easier-than-ever-to-find-out-if-you-qualify-for-EITC

EIC and Your Family Tree: What Counts as a Qualifying Child?

May 22, 2012 by · Leave a Comment
Filed under: Earned Income Credit 
Babbitt Family Tree

Photo by Jeff Babbitt, 2009.

Some people honestly don’t know who does and who does not count as a qualifying child for EIC and they mess it up.  But one of the most common types of EIC fraud is someone claiming a child that does not belong on his income tax return.  If you make an honest mistake, the IRS agent is probably  going to assume you’re committing fraud anyway.  So I’m here to keep you out of trouble.

I come from one of those families where we use phrases like, “first cousin once removed.”  When I was a child I remember going to a wedding reception and playing all evening with my “cousin”, only to be told later that she wasn’t a cousin, she was my “father’s half-brother’s step daughter.”  (Yeah, do the calculation, in any normal family your uncle’s kid is a cousin, right?)

I married into a family that is “we’re all one big happy”.  We don’t have steps, or in-laws, or halfs, we’re all brother, sister, mom, cousin, etc.  I think most people are somewhere in between.  But what we’re dealing with today is the IRS version of family and the IRS version of family  goes like this:

Let’s start with you.  You are the center of the universe and all family members revolve around you.  What we’re trying to figure out here is what counts as a Qualifying Child for you—this eliminates all parents and grandparents and members of their generation.

You may count your brothers and sisters.  You must be older than your brother or sister to claim them (unless they are physically or mentally disabled.)   You can also include step brothers and
sisters, and half brothers and sisters, and adopted brothers and sisters.

A step sibling means that your parent married somebody else who had kids.  There is no blood relation, but there is a marriage license.  If your parent did not marry the other person, even though you all live together and think of yourself as one family unit, there is no IRS relationship.

A half sibling means that one of your parents had a child with someone other than your birth mother or father.  Let’s say your mom had you and then left your dad for someone else and had a child—that child is your half sibling—you two share half of a gene pool.  The counts with the IRS.

Adopted siblings are just that—they’re adopted.  There will be court records showing that they were adopted and part of your family.  Adopted children are always treated like natural born children for IRS purposes.

These people are all on your even level of the family tree.  Imagine you’re standing there with your arms straight out with your brothers and sisters side by side—this is your generation.

Down below your generation is your son, daughter, step child, foster child or a descendent of any of them, for example grandchildren or great grandchildren.  Additionally, any descendents of your  generation—those are your nieces and nephews (or great nieces and nephews.)    So let’s say your half brother adopts a child and he dies and you’re raising that child—that counts as your qualifying child for EIC purposes because he is your nephew.

A foster child is a child who has been placed by an authorized placement agency in your home or by a judgment or decree or court order.  No matter what, a foster child has some legal paperwork involved.  If your neighbor runs off and leaves her kid behind and you wind up raising her, she doesn’t count as a foster child until the courts come in and say she’s a foster child.  This is one of the most common mistakes people make—claiming children they’re taking care of as foster children without the court documents to back it up.  Without that legal piece of paper, the child is not a foster child.

Cousins are never qualifying children for EIC purposes.

Small Business: Proving You Have Income Without a 1099-MISC

For some small businesses, a simple wire bound receipt book is the key to substantiating your income.

Now some people may be wondering, “Why would I want to prove I have more income than I have to?”   But for many small business owners, that’s exactly the problem—you have income, you want to report it to the IRS, and you’re having a hard time proving it.  This post is for you.

The number two reason for reporting your non-1099 income  (number one of course being basic honesty) is qualifying for the Earned Income Tax Credit.  2011 sort of hit small business owners who normally qualify for EIC with a one-two punch.  We had the new 1099 reporting requirements that upped the ante for so many businesses, and we had the new EIC tax preparer due diligence rules with one of the questions being “Do you have forms 1099-MISC to support the income?” With the next  question being, “If not, is it reasonable that the business type would not receive Form 1099-MISC?”  Here’s a clue:  if you answered NO to the first one, you have to answer YES to the second.

So what types of businesses wouldn’t normally receive a 1099?  Bunches of them!  Face it, if you’re reading this—I’m guessing that your business doesn’t receive 1099s.  Generally, it’s reasonable to expect that anybody who works for other people, as opposed to other businesses, would not receive a 1099.  House cleaners, dog walkers, handymen, lawn mowing services, daycare  providers, interior decorators, and even income tax preparers are all types of business that could easily never see a 1099.   (Yeah, me too!  Although I’m now getting 1099k forms because I take credit cards, I don’t get 1099-MISC for preparing personal tax returns.  Maybe I’ll see some 1099-MISC forms from some of my business clients this year, but I never used to get them in the past.)

So, how does a small time personal service provider prove his or her income to the IRS?  There are a couple of things you can do.  I’m going to start with my favorite:  the business bank account.  This is what I do and several of my clients do it too.   (Okay, because I’m their accountant and this is what I tell them to do.)   Get an Employer Identification Number (EIN) for your business and set up a separate bank account for your business in your business name.  Only business income goes in, only business expenses go out.  You may have to put some of your own money in for a start up, and once you’re making money you’ll take out a draw, but you’ll label those as such.  Other than those two items, your business checking account is pretty much your profit and loss statement as well.  Now for a bigger company that would be over simplifying things, but for us little folks–I’m spot on.  See this post for more information about getting an EIN number:  Free EIN

Why does this make good proof?  Because you’ve got a monthly record of your income and expenses.  I also have deposit slips to back it up:  Mary Jones paid me $200, Fred Smith paid $250.   It’s a good solid audit trail.  Here’s another post about bookkeeping and your business bank account:  Banking and Bookkeeping

But what if you don’t have a separate account?   Maybe your business is just too small to bother with the expense of an extra account.  What if you’ve just got something really simple like watching the little neighbor kid for a couple of hours after school every day.  There’s no contract, no business cards, no advertising.   You get $100 a week from your neighbor friend.  She pays you in cash—it never sees the inside of a bank because that’s your grocery money.   It’s not much but it supplements your child support.  How do you prove that kind of income?

The easiest way to prove your income if you provided child care is to have the person you provided it for claim your services on their tax return.  You make them a daycare receipt, just like the ones regular day cares do showing the name of the child, how much they paid you and your EIN number.  (You can use your social security number but I never recommend that.  You can get an EIN number for free.  Protect yourself.)  This is doubly good because the IRS will get confirmation of your income from an outside source.  You prove income, your customer gets a tax deduction, it’s a win/win situation.
But what if your business isn’t day care?  What if you did something like mow lawns around the neighborhood and shoveled snow in the winter?  Nobody’s going to be claiming you on their tax return, what can you do?  In your case, I like receipt books.  You can find different kinds at Office Max or any office supply store.  I like the ones with a carbon copy—one for you, one for your customer.

Now if you have just one customer and you’re always going to the same place—you can just use the little one that just has a couple of lines and the amount on it.  You might write, “Mowing, Mr. Jones, $30, 5/15/2012” on it.  You know what you did, who you did it for, how much you got paid, and when.  If you have multiple customers you’ll want the larger receipt books that include the address and phone number of the customer.  If you do different types of jobs for different people, you might need the bigger ones so you can write down the type of work that you did for them as well.

You don’t have to have a 1099-MISC to prove your income to the IRS.  You just need to have a system in place to document your income and you’ll be fine.

Stolen Children

May 9, 2012 by · 1 Comment
Filed under: Earned Income Credit 
Imagine being a parent, raising a family, taking your kids to school, making their breakfast, tucking them into bed at night and basically doing all of the everyday kinds of things that parents do for their children.  Then you go to file your tax return and you are notified by the IRS that someone else has already claimed your children on their taxes.  How can this happen?
I had always thought that cases like this were caused by divorced parents behaving badly, and to be quite honest many times that’s exactly what it is.  But after I did a post about what you should do if someone else claims your child, I started receiving numerous posts, e-mails and phone calls about how for some people, this happens to them year after year after year.
One form of recourse the IRS has is to ban a person from claiming the Earned Income Tax Credit for three to eleven years if the person fraudulently claimed a child on a tax return.  You would think that would solve the problem–except, as I’ve since discovered, it does nothing to stop true fraud.  Although the original guilty party may not be able to file an EIC claim at all–it doesn’t prevent him or her  from selling the child’s social security number on the black market to be used for fraudulent tax returns.
So who’s harmed by this fraud?  Well obviously, the parents of the children who’s identities are stolen, and the children themselves.  But also you!  According to the IRS, there is approximately $12 to $14 billion dollars of EIC Tax fraud every year.  $14 billion that’s coming out of your taxpaying pocket.
We’re talking about some serious fraud here.
In a normal case, the wrong parent claims a child, IRS notices go out, the issue is settled and the offending parent pays back the taxes while the rightful parent claim gets paid his or her refund.  While the system isn’t perfect, in theory it’s all good.
With a stolen child identity case, it’s genuine fraud.  The criminal steals the ID, creates a fake tax return–often under a fake identity, uses the child’s very real social security number to receive refundable tax credits, and then disappears off the radar before the IRS can catch him (or her.)  The IRS has to pay the real parent his tax refund–because it’s the rightful claim, but the money that went to the criminal is lost forever.
As an adult, if your identity is stolen and used in a phony tax scam, you can receive a PIN number to protect you for future tax filing.  Currently, there is no such protection for children.  And child IDs are extremely valuable to fraudsters–with a single child being worth thousands of dollars in federal refundable tax credits.
What can you do?  Please sign my petition to the Obama Administration to create a child identity theft protection PIN number for victims of child identity theft.  Basically I’m asking that anyone who has successfully defended a rightful claim for having their children on their tax return for two years in a row to be awarded a PIN number to be used in association with their child’s social security number in order to prevent fraudulent returns from being filed.
You can access the petition by clicking on this link:  White House petition
Why defend for two years instead of only once?  Divorced families often have conflicts over claiming a child and it’s fairly common to have an issue once in awhile.  Issuing a PIN after just one claim could wind up muddying the system worse than before.  If a family has defended the claim twice in a row– that’s a clearer indication of fraud and the need for protection is much more defined.
What happens if custody changes and the rightful parent is not the one with the PIN number?  If the parent with the PIN number doesn’t turn over the PIN along with the child’s custody, the new custodial parent will wind up paper filing their tax return and going through the same process of claiming their child as what happens currently.   The purpose of the PIN is to stop fraud, not completely end parental rights.  Please sign the petition today, and help stop child identity theft.
See also:  My Ex Claimed My Kid, Now What Do I Do?  http://robergtaxsolutions.com/2011/01/my-ex-claimed-my-kid-now-what-do-i-do/

EIC Help Page

January 27, 2012 by · 4 Comments
Filed under: Earned Income Credit 
Life's a little bit easier with EITC

It’s that time of year and we’re getting bombarded with questions about the Earned Income Tax Credit. Here’s some of the most popular questions and where to get the answers you need.

My ex has custody of my kids, but the divorce decree says that I get to claim the exemption. My ex says that she gets to because she has custody. I don’t get it, what should we do?

You’re in a situation where you “split” the exemption. Here’s information about how to do that legally: http://robergtaxsolutions.com/2011/11/split-exemption-claiming-one-child-on-two-tax-returns-%E2%80%94-the-legal-way/

According to my divorce decree, I’m supposed to claim the exemption for my child but my ex claimed her anyway. Should I send a copy of the decree to the IRS or the judge?

I’m not an attorney so I can’t give legal advice, but this post has information on IRS rules and court ordered exemptions: http://robergtaxsolutions.com/2012/01/court-ordered-exemptions-and-the-irs/

My child’s daddy is out of the picture. My boyfriend has been living with us for three years now and he’s the primary support for my child. Can my boyfriend claim may child on his tax return because it will give us a bigger refund?

No. And here’s all the reasons why: http://robergtaxsolutions.com/2012/01/can-my-boyfriend-claim-my-child-by-a-different-father-on-his-tax-return-for-the-earned-income-credit/

I went to file my taxes and they got rejected. The IRS says that somebody else used my children’s social security numbers on their tax return. What do I do now?

Basically, you’re going to paper file your tax return. Here’s more information: http://robergtaxsolutions.com/2011/01/my-ex-claimed-my-kid-now-what-do-i-do/

What do I need to do to qualify for the Earned Income Credit?

There are some basic rules that anybody claiming EIC will have to meet, like having a valid Social Security number for one thing. Here’s a list of the rules: http://robergtaxsolutions.com/2011/12/eight-basic-rules-to-qualify-for-the-earned-income-tax-credit/

What if I need more information?

The IRS has the EITC home page. (EIC and EITC are the same thing; earned income credit = earned income tax credit.) They have lots of worksheets to help you determine if you qualify for EIC if your children qualify, and where to get help preparing your return. Here’s the link: http://www.irs.gov/individuals/article/0,,id=96406,00.html

Now if you can’t find the answer you’re looking for, you can always call the IRS – their phone number is 1 (800) 829-1040. Their phones have been slammed lately so you may be on hold for awhile. A few tips: call early in the morning – like 7 am, or later in the day – like after 6pm. And it’s better to call later in the week; Monday’s the worst day to call the IRS. Please be patient and kind to the IRS agent that is answering your question – they have special rules and procedures they are required to follow.

Can My Boyfriend Claim My Child by a Different Father on His Tax Return for the Earned Income Credit?

January 6, 2012 by · 72 Comments
Filed under: Earned Income Credit 
Dad with his Kids on Father's Day

The IRS doesn't care how good a "Daddy" is. It's all about the strict tax law.

Short answer: No.

Long answer: Noooooooooooooo! Sorry about the bad joke. But really, no he can’t and here’s why:

First, and most importantly, it’s against the law. Seriously – claiming a child that you don’t have a right to claim on your tax return is income tax fraud and that’s a federal crime.

But how would he get caught? Good question. The most likely way he’d get caught is if someone else tried to claim your child on their tax return, like the child’s real father or a grandparent. Someone might have a problem with you or him and turn you in to the IRS. It’s one of the most common questions I see on the internet: “How do I turn someone in?” I’ve worked on a couple of cases where an older child has accidentally turned someone in by filing paperwork for school which somehow got into IRS records. You don’t want to take the risk.

But the most dangerous person as far as your boyfriend is concerned is you. Let’s say you decide to let your boyfriend claim your child and claim the EIC tax credit because it works out to be more money if he does it. You’re breaking the law too, but when push comes to shove you can break into tears and say he forced you etc., etc. It’s not against the law to not claim your child on your tax return, and proving that you “conspired” with him to commit tax fraud would be hard to do. So let’s say that the boyfriend dumps you and goes out and buys a nice engagement ring for his new girlfriend with that tax refund. I’m guessing that would make you hopping mad, right? Furious! You want to get even, don’t you? What better way to get even with that scumbag than to report him to the IRS. You see why he should be afraid? Very afraid!

So what could happen to my boyfriend if he did get caught? The maximum EIC for one child is $3050 ($5036 for two, and $5,666 for three.) First, he’d have to pay that back. Let’s say we’re just talking about one child, he’ll have to pay back $3050 right off the bat. Then he’d also have to refund the $1,000 child tax credit, so now we’re up to $4050. Now he’ll also have lost the head of household status which gave him a lower tax rate plus he’s lost the exemption so we’re looking at maybe $5,000 (or more if we’re talking about more children). Then the IRS will tack on fines, another 25% or $1250 for late payment fees, and most likely another 20% or $1,000 for under-reporter penalties so you’re looking at about $7250 in taxes owed. Ouch!

It’s also possible that he could be criminally prosecuted. Personally, I have never worked an EIC case that has gone on to the criminal division, but it does happen. What good is your boyfriend to you if he’s sitting in jail?

Don’t create problems for yourself by committing tax fraud. It seems like easy money and the temptation is great. You probably even know people who’ve done it and never had any problems. But if you want to feel safe and secure and get a good night’s sleep, file a correct and proper tax return.

You may also be interested in these posts:

My Ex Claimed My Kid: Now What Do I Do?

Eight Basic Rules to Qualify for the Earned Income Tax Credit


Note:  We try to answer all the questions that come to us but please be patient.  It’s our busy season right now.  We may not get to your post until the weekend.  When you make a post and use the capcha code, it won’t immediately show up.  You see, for every normal person like you that posts, there’s about three advertisements for things your mother wouldn’t approve of.  (We try to keep this a G rated website.)   We have to edit those out.  If you need an answer right away, here are some links that might help:

EIC questions of any kind:  http://www.irs.gov/Individuals/Earned-Income-Tax-Credit-(EITC)-%E2%80%93–Use-the-EITC-Assistant-to-Find-Out-if-You-Should-Claim-it.

How to find free tax preparers:  http://www.irs.gov/Individuals/Free-Tax-Return-Preparation-for-You-by-Volunteers

How to find your local IRS office:  http://www.irs.gov/uac/Contact-Your-Local-IRS-Office-1

If you want to hire us, please call (314) 275-9160 or email us.  We do prepare returns for people all over the country (and a few foreign countries as well.)  We are sorry but we cannot prepare an EIC return for someone outside of the St. Louis area because of the due diligence requirements.

My Ex Claimed My Kid: Now What Do I Do?

January 31, 2011 by · 1,048 Comments
Filed under: Divorce, Earned Income Credit, Family 

Ex claimed my kidPlease also read “Stolen Children“.

This happens to people all the time.  You go to electronically file your tax return and it gets rejected because someone else has already claimed your child.  What do you do?  I say fight back, and here’s how.

The first step to fighting back is to make sure that you’re in the right.  Ask yourself these questions:

  1. Are you the biological parent of the child?  Hint:  if your answer is “I’ve raised her like my own.”  You’re going to have trouble winning.  If you’re a grandparent, step parent, aunt or uncle; and the person who claimed the child is the actual parent, you don’t stand much of a chance.  (That said, some folks will have a credible case, but I’d suggest professional help here because it is tricky.)  To go this route you should be the real parent.
  2. Did the child live with you all year?  If not all year, for at least over half of the year?  If you had custody all year you have a much better shot of winning.  You absolutely must have had custody for over half of the year to even think of trying this.  If you’re on the border line, where your ex had the child for half the year and you had half, this might not be worth it.
  3. Is this good for your child?  Generally you’d think that having more money in the household would be good for your child, but if fighting with your ex could cause harm to your child, you might want to stop and think about it a bit.

Step two.  Once you’ve determined that you are in the right and that you are entitled to claim your child, then what you need to do is print out, sign and mail that rejected return to the IRS —keeping your child as your dependent on the tax return.  When you do this, the IRS has to take it in.  They have to look at it and it’s going to throw whoever claimed your child into an audit.  If an Earned Income Tax Credit is involved then those audit papers generally run 11 to 22 pages long.  (11 pages for a straight EIC audit, 22 for an EIC and head of household audit, they’re the same questions it’s just that 22 pages is more intimidating.)

Here’s the scary part, you’re going to get the same paperwork.  It is a little intimidating, but you’re expecting it.  Because you’re the custodial parent, that is your child lives with you, you can answer those questions with no problem.  People who shouldn’t be claiming your kids can’t answer the questions and that’s why you’ll win.  If your kids are in school, you’ll need a document from the school saying they attend and where they live.  If they’re too young for school, you can get a statement from the doctor’s office that you’re their parent and you pay their medical bills.  You’ll have the resources to prove that you’re the parent.

If you’re reading this and thinking, “I can’t prove I have custody of my kids,” then maybe you shouldn’t be filing for them.  You will have to provide some proof:  school records, doctor’s files, church documents, day care receipts, health insurance records, something professional.   Your Mom or a friend can’t vouch for you.

Once you’ve received the audit papers, completed them and sent them back, then it’s a waiting game.  Your ex (or whoever claimed your child) will have to complete the same paperwork.  The IRS will examine the papers and determine who had the proper right to claim your child.  But since it’s you, you will win.

The big downside to this is that it will take months to settle.  Months.  On the upside, once your ex has lost an audit case for claiming your child, it will be very difficult to ever try it again.  You’re not just solving a problem for one year, you’re preventing future problems as well.

What if you need the money now?  That’s the most common question.  Sorry, but that’s impossible.  What you’ve lost, you can’t get back without a fight.  If you have more than one child, and only one was claimed incorrectly, you could file now and at least get part of your refund, then file an amended return later.  I don’t recommend doing that, but I also understand sometimes you need the cash now.

If you try doing this as an amended return there are two consequences:  first, it will slow everything down even more.  You can’t file an amended return until your first return is completely processed.  An amended return will take about 16 weeks to run through the system before the whole audit process begins so you’re basically adding 4 to 5 months to the timeline for solving this issue.  Second, filing a return and amending to add a child reduces your credibility with the IRS.  Your documentation had better be rock solid because you will have no wiggle room for doubt if you submit an amended return to claim your child.

One more thing to consider before you go through with this.  Call your ex and talk it out.  I’m not crazy, hear me out.  You’ve read this far, you know that fighting is a big hassle.  Before you go into warrior mode, maybe you can negotiate a peace treaty.  What do you stand to gain from this?  What does your ex stand to gain?  It’s important that you file your returns legally, but with divorced or never married couples, you can split an exemption:  the custodial parent claims head of household and EIC, the non-custodial parent claims the child tax credit and the exemption.  It could be a good thing for both of you and for your child.  (Remember, what’s best for the child?)  Instead of going to war, you have your ex amend his/her return and you file your return right after the amendment is accepted.  It still is slow, but much faster than going through an audit.  And it’s a peaceful solution.  (Please, don’t even think of trying this if your ex is dangerous.  Safety first.)

Finding out that someone else has claimed your child for taxes can be shocking and financially devastating.  The assumption is usually that it’s the ex, but that’s not always the case.   When you file to claim your child, you will never be told who the other person is.  (Of course, if it’s your ex you’ll probably get an unfriendly phone call so you’ll know.)  It’s scary how often it’s not the ex, though.  Be sure to protect your child’s social security number.  Don’t keep the card in your purse.  Don’t share the social security number with anyone.  Your child needs your protection.  It’s hard enough being a kid, being a kid with a stolen identity is worse.


Note:  We try to answer all the questions that come to us but please be patient.  It’s our busy season right now.  We may not get to your post until the weekend.  When you make a post and use the capcha code, it won’t immediately show up.  You see, for every normal person like you that posts, there’s about three advertisements for things your mother wouldn’t approve of.  (We try to keep this a G rated website.)   We have to edit those out.  If you need an answer right away, here are some links that might help:

EIC questions of any kind:  http://www.irs.gov/Individuals/Earned-Income-Tax-Credit-(EITC)-%E2%80%93–Use-the-EITC-Assistant-to-Find-Out-if-You-Should-Claim-it.

How to find free tax preparers:  http://www.irs.gov/Individuals/Free-Tax-Return-Preparation-for-You-by-Volunteers

How to find your local IRS office:  http://www.irs.gov/uac/Contact-Your-Local-IRS-Office-1

If you want to hire us, please call (314) 275-9160 or email us.  We do prepare returns for people all over the country (and a few foreign countries as well.)  We are sorry but we cannot prepare an EIC return for someone outside of the St. Louis area because of the due diligence requirements.

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