There’s a big difference between accidentally claiming your child and criminal tax fraud.
I often hear the question, “Will I go to jail if I cheat on my taxes?” People see celebrities go to prison all the time, Richard Hatch, the guy who won a million dollars winning “Survivor”was been all over the news for awhile for tax evasion. He spent four years in prison. Note: if you win a million dollars on national television, it’s safe to assume that the IRS knows about it and is looking for it on your tax return. Other celebrity tax evaders include Wesley Snipes, Darryl Strawberry and Willie Nelson. (And the list goes on and on….)
But what about EIC fraud? What happens to you when you claim a child that’s not yours, or if you allow someone to claim your child when that person isn’t the parent? What’s the punishment there?
If the IRS examines your return and finds that you cannot claim EIC, the worst case scenario would be that they impose “civil fraud” penalties on your return. The penalty for civil fraud is 75% of your underpayment of income tax.
Say for example that you involved yourself in a scheme where you claimed children that didn’t belong to you over the course of three years. The difference between what you received as a tax refund averaged $5,000 more each year than if you didn’t illegally claim those children for a total of $15,000 in excess refund dollars. When the IRS catches up with you, they will demand their $15,000 plus another $11,250 for the penalty which would make your balance due $26,250. Add to that the interest you’d be charged and you see how costly this is.
What makes this even worse is that if you are charged with civil fraud the IRS can then turn the case over to the Criminal Investigation Division for prosecution. You could face both civil and criminal penalties at the same time—meaning they put your butt in jail, levy your bank account and put a lien on your house and any other property you own.
Most people who get caught for EIC fraud don’t have the money to pay back the tax owed, not to mention the added fines. And of course, the higher the dollar amount owed to the IRS, the higher the likelihood of criminal charges. So you really don’t want to hear the word “fraud” if the IRS comes calling.
But that’s the worst case scenario, fraud is pretty dangerous stuff, and they have to be able to build a case for it. One of the key points of fraud is that you knew you were doing it. I once spoke to a potential client over the phone, she had received an IRS letter and they were charging her penalties for fraud. As she explained her case, she kept insisting that “she didn’t know.” I thought there might be a case for her so I asked, “You mean you didn’t know it was wrong to claim someone else’s child?” She said, “No, I didn’t know I could get caught.” That’s not going to get you off of fraud charges. I gave her the name of an attorney—if there’s a possibility of criminal charges, you’ll want the tax attorney over the EA or CPA. (EAs and CPAs have client privilege for tax issues only, for criminal cases, only an attorney has privilege—meaning what you tell them, they can’t tell on you.)
In most cases though, a much more likely scenario is an accuracy related penalty—that would be 20% of the under-reporting. Let’s say you live with your girlfriend, she has a kid, she said you could claim the kid; you don’t know it’s illegal but you get caught. You’ll have to pay back the EIC plus the accuracy related penalty. If the EIC difference was $5000, then you’d add another $1250 making the balance due $6,250. The IRS would add interest to that as well.
Generally, if you lose an EIC audit, you’ll also be banned from claiming EIC for somewhere between 2 and 10 years depending upon the severity of the case. That’s probably the worst penalty for most people. Many of the people who get in trouble for EIC generally are able to claim EIC in other years. Being banned from EIC for 10 years can cost a person over $50,000. That’s a lot of money.
Accuracy penalties usually involve amounts of over $5,000. If your EIC under-reporting is less than that, you’re more likely to pay “late payment” penalties which are equal to ½ of one percent per month. For example, you file your return in February of 2008, in March of 2010 they catch up with you. This means that the penalties have been adding up for 24 months, you’ll pay 12% for the penalty, plus the interest owed. Let’s say you only got an extra $1000 for falsely claiming EIC, you’d have to pay back $1,120 plus interest of course. The IRS will always get their interest payment.
But what if it’s not my fault? That’s a very common question. What if it really isn’t your fault? What happens if you went to a preparer that didn’t know any better and claimed EIC for you when she shouldn’t have. Or worse, you had a crooked preparer. (These things really do happen.)
You’ll have to report the preparer. There are serious fines and penalties for tax preparers associated with EIC negligence and fraud. The smallest, yet the easiest to prove, is the EIC due diligence paperwork. For every tax return that has EIC on it, a paid preparer must have a form 8867. Here’s a link to see what it looks like: http://www.irs.gov/pub/irs-pdf/f8867.pdf
The link is to the official IRS form. In my office, my computer software actually uses the same form but I’m required to sign it and have my client sign it as well basically stating that everything on the EIC form is true. Here’s the thing—the IRS can call up any tax office at any time and say, “Hey, we’re coming to audit your 8867 EIC forms.” As the owner of a tax business, I have to be able to pull them all and have them ready for inspection. If I don’t have an 8867 form for every EIC tax return I prepare, its $100 for each one I’m missing. Guess what, I’m not going to be missing any of those forms. I can’t afford it and I don’t prepare that many EIC returns. You can bet that an office with lots of EIC returns has itself covered in the forms department.
So here’s where I’m going with this, if your preparer really is crooked, do report him to the IRS, it’s the right thing to do. But if you lied to your preparer about your relationship to the child you claimed or some other EIC offense, and the IRS goes to the preparer’s office and pulls the 8867 forms, and they find a signed affidavit with your signature saying that you are the actual parent of the child—now you’ve just proved that you committed a fraud. That’s the last thing you want to do. Remember, a plain error costs a lot less than fraud and there’s no jail time involved.
So what should I do if I receive an EIC audit letter? If you have the rightful claim to EIC, fight it. If you’re not sure, maybe you do, maybe you don’t—seek professional help. I’ve seen innocent people lose EIC audits because they didn’t know the rules. Don’t take chances, it’s too costly. If you know for a fact that you should not have claimed a child, pay up and get it over with as quickly as possible. It won’t be easy, but in the long run it will be better for you.
If you know that you’ve illegally claimed EIC, don’t wait for the IRS to come after you. File an amended return and pay the tax. You’ll definitely have to pay interest, but by filing an amended return and paying before you get an IRS letter, you have a very good chance of avoiding the penalties. You’ll probably sleep better too.
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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
For the past couple of years, my ex-wife has been claiming EIC, even though I have custody of our children and they live with me for more than six months of the year and I provide more than half of their support. I told my ex-wife that I don’t think she’s entitled to claim EIC, but she still is. Can I get in trouble with the IRS for this? Should I report her?
Hey Emma–
You’ve got a tough little spot–but maybe I can help. First–you were 23 when you filed–technically, you can’t get EIC if you’re under 25 unless you’re claiming a child–but you were claiming a child so there’s a bit of gray area there.
But you do have other problems. Your mom “let you claim them”. Okay, this could be an issue. Your sisters are her daughters. If your mom has a job and has earned income and “can” claim them–then she should not have let you claim them–that is a type of fraud. I’m guessing your mom always claimed the girls in the past and the IRS computers went–“Hey! Whats up with that?” Plus, you’re young enough to be a college student–college students can’t claim EIC. You might be working full time–but I can see how the computers had a hey day with your return.
What about the girl’s Dad? Could he have claimed them? That could send your return into an audit as well. If he claimed them–because he’s a parent, he wins.
You should probably go see someone in person and get a thorough review of your return and your situation and see if you’ve got a winning case or not. It’s possible that you do–but your odds are really bad–so make sure you get some professional help so you don’t make a mistake. You can get free help: http://www.irs.gov/individuals/article/0,,id=107626,00.html
You’ve got more issues than you can cover in an online blog post–and if you do have a winning case–you’re going to need help to prove it. If you don’t have a winning case–I don’t think you’ve committed fraud–I think you made an honest mistake–and you may need some help proving that too. Don’t go this alone, okay? Good luck.
Hi Colleen,
It’s frustrating watching someone get away with what you know is illegal isn’t it? There is a way to report someone that suspect of fraud–which claiming children that don’t belong to you is–but I sometimes wonder if it ever works. But here’s the link: http://www.irs.gov/individuals/article/0,,id=106778,00.html
The best way for this woman to get caught is for someone who has a legal right to claim the child make a claim–but it sounds to me like that’s not going to happen. So you’re probably the only one who cares enough to try to help the child. The thing is–once you report the fraud–because of privacy laws, you’ll never know what happened to with the case. But at least you’ll know that you did what you could. Good luck.
Hi i was recently audited for filing my two little sisters. I have proof that i provided for them and also was given permission from my mom. When i contacted the irs i was told that because i was under the age 25. ( i will be 24 in two months) i could not receive earned credit for them. Is this a new law? Can i appeal this? and if so how? Help :(… Thanks 🙂
hi i was just wondering if its illegal for this person i know to have claimed 2different children on their taxes. last year she claimed her girlfriend’s son (she was actually living with the child and was the only one in the relationship with a paying job.) but this year she has claimed a friend’s child. she does not live with the baby. nor does she provide all of the things for the baby. she does watch the child for the mom and during the times she is babysitting for the child im sure she pays for some stuff , but not because she has to, because she wants to buy the baby a new outfit or toy. i have been wondering if it is illegal for her to claim this baby this year since she is not dating the mother or living with the child. the mother of the child has a number of other children as well. the woman i am referring bragged recently to me that she got $4800.00 on return for claiming the child that is not hers. Since she has claimed children that arent hers for the last two years do you think the irs will catch on? or is this even a crime? if it is how do i report it? i am concerned for the child’s welfare b/c the woman is a drug addict, has recently been institutionalized, and has a seizure disorder which cost her to lose her license, but she still drives (with the children and high on drugs.)
@Bobbi–
That’s a good question. I had a case that I wound up referring to an attorney because the parent had knowingly allowed people to claim her kids illegally–she was in big trouble with the IRS and facing criminal charges.
On the other hand, a parent who was not involved with people illegally claiming EIC–because the parent is a victim–that would not be a problem and there would be no fines or penalties because the parent is the victim.
If a person is potentially facing criminal fraud charges–they should hire a tax attorney–not a CPA or EA. EAs and CPAs have client privilege–(means we can’t tell on you) for tax purposes–but we lose our privilege in criminal matters. Attorneys have privilege for criminal matters–and you want that if you’re being charged with a crime (even if you’re innocent.)
Hopefully I’ve given you more information than you need.
Hey Denise,
I’ve got big advice for you! Read this: http://robergtaxsolutions.com/2011/11/split-exemption-claiming-one-child-on-two-tax-returns-%e2%80%94-the-legal-way/comment-page-1/#comment-5500
Bottom line–your ex gets to claim the dependency exemption and the child tax credit only. YOU get to claim head of household and the Earned Income Credit (if you qualify.) That can be worth a pretty penny.
Thank You, so much!
I was wondering if a person claimed another persons kids on their taxes and got into trouble can the parent get into trouble too? Or do they get off free of everything?
My ex husband got the right to claim our 2kids in our divorce. Big kicker her is the kids live with me and go to school where I live. I don’t understand how he has a right to claim them if he doesn’t have physical custody of them. Any advice?
Gee Carrie,
I see your problem. If I were to accidentally mark “son” instead of other on a client’s tax return, I would pay a fine of $500 every time I did that. (And probably lose my license.) But for your boyfriend–well he could be in real trouble which could go so far as to be charged with criminal fraud–and you too as his accomplice.
Not to scare you, but you need to know how serious that little “oopsie” is. Here’s what you do–
1. Immediately file an amended tax return changing him to what he should be. Most likely, that will be single with no dependents.
2. He will have to pay back whatever he owes the IRS. It’s really important to do that right away. If he amends his return before April 15th, it’s like he never filed the first one–no harm no foul. If he waits until after April 15th–well, then the fines and penalties start to rack up.
No, I doubt that you two will go to jail, but if you don’t fix the return and you get caught, the fines and penalties are severe:
5% per month on the amount you owe the IRS up to 25% of the balance due.
Interest on the balance due.
Fraud penalties of another 20% on the balance due.
And the IRS is pretty nasty about that stuff too–they do things like garnish your paycheck and levy your bank account.
So, do yourself a huge favor and fix it now. If you care about your boyfriend at all–fix it now. Go to the free VITA site near you and get some help. They’ll make sure that you’re doing a legal tax return. Here’s how to find one: http://irs.treasury.gov/freetaxprep/
Don’t wait. Go.
Hey Kina,
Getting child support doesn’t keep you from claiming your kids on your tax return. There are a whole bunch of rules, but child support doesn’t stop you. Here’s a link to the IRS website to help you figure out if you can claim EIC or not: http://apps.irs.gov/app/eitc2011/SetLanguage.do?lang=en
If your ex already claimed them, but you were supposed to–you’ll need to file a paper copy of your tax return. Here’s some information on that: http://robergtaxsolutions.com/2011/01/my-ex-claimed-my-kid-now-what-do-i-do/
I did my boyfriends tax return for him and claimed my children on his return. I accidently marked “son” instead of other dependant. Since we lived together and he was their sole provider can he be penalized for this?
I saw this video says i can claim my kids even if i get child suport. this true? I thinkmy ex alredy claim them, can i still file head o household?
http://www.youtube.com/watch?v=b8foEDSMOvI
Thank you! They fixed it.
@Brandy,
Sorry girl but you’re toast. You’ve got nothing and your tax preparer was crooked. What you need to do is go to someone else–like one of the free VITA offices and file an amended return taking your cousin off as a dependent. Do it now to avoid getting into worse trouble. Your cousin was also in the wrong but she’s unlikely to get caught. Don’t ever do anything like that again.
Oh Josefina–definitely tell the employer to change the 1099. Your son can still file his return claiming the income, but make sure the employer issues a corrected 1099. Don’t put that income on your tax return. It’s not yours.
Hey D–
It doesn’t sound like the ex can win this. It’s just a pain in the behind for you to do the paperwork, but it sounds like you’ve got a winning case. Make sure you follow through.
I got into an altercation today with my cousin who let me claim her child as a dependent. We agreed that I would give her half of the money for the child which would be 750 dollars. She is now claiming that she meant half of my entire tax return. When I told her no she said that she will go to file taxes tomorrow and claim her son so that I will get audited. My preparer lister her child as my nephew even though I told him he was my cousin. He said there was not an option for cousin and that this would be fine so I believed him. What I want to know is, do I have a case against her since I have witnesses from the tax office since she went with me that she knew I was claiming him and gave me permission and is now changing her mind since I wont give her half of my return?
Hi, my son earned 2500 this year and received a 1099 with his name but my SSN. Am I supposed to amend my return and add this money to it or should I tell his employer to correct the 1099? Is it too late for his employer to do that? If they do correct it, does he have to file taxes even though he is under age and will he have to file his own return year after year?
my huband has an x wife who claimed their son who she does not have custody of she only gets every other weekend no hoidays no summer . she owed 700 dollars in child support arrears .she didnt work for 6 months.they had her on a offset.when she relized she wasnt getting any money back she did . this is the 2 times she has done this .i dont understand why we have to wait 6 to 8 weeks when she oed child support arrears and didnt work for 6 months why wont they put her in jail its fraud its in the divorce degree that my husband gets to claim . is there any way she can win.we mailed it in and put a hold on the child support arrears check cause the irs said if she did that the irs wants the money back it wasnt hers to giveand she would be 700 doll in clear with the child support arrear how can we stop her and filing before her not an option we a house and both of uswork all she has is her help
.
Thank you for replying!
I had called the IRS today and they told me to let the original return go through and once we recieve the money print the amended return and write a check for the difference. As long as it is post marked before tax deadline everything should be ok. My daughters father gets to claim her every other year which this is his year so my boyfriend cannot claim her as dependent status. Yes I agree I will NOT be listening to what people tell me about filing taxes anymore until I do my own research first. Thanks again, you were very helpful.
Hi Michelle,
What you need to do immediately is to amend your boyfriend’s tax return and take your daughter off of there for at least EIC and head of household.
Now–did your daughter live with your boyfriend for the entire 12 months? Did he support her? If yes, maybe he can claim her as a dependent–but no child tax credit.
But–your ex may be entitled to claim your daughter, and if he is, then your boyfriend is completely out of luck on that one. Parent gets the higher claim.
Check your divorce decree or separation agreement and see what it says about your ex claiming your kid. If your ex has no rights, then your boyfriend might still be entitled to the exemption.
It wouldn’t hurt you to go see someone for a face to face consultation, just to make sure that you’ve done everything right. Whoever gave you that advice before was dangerous.
I did my boyfriends taxes. I was told that since he supported me and my daughter for the whole year that I could have him claim her in EIC. Her father claimed her as a dependent and I didn’t but did the EIC because I didn’t know. Apparently I made a mistake from what i’m reading. What should I do to correct this? I didn’t mean to “chest the system” and I do not want him to get into trouble for my mistake.
@ Laura–
I think your letter explains the custodial parents’ side better than anything I could ever say. Thanks.
Hi Melissa,
I’m not an attorney so I can’t say what he’ll face with legal issues. Basically, the big thing you’ll see on the IRS documents is if they use the term “fraud.” There are two types of fraud–civil and criminal. The IRS starts with civil fraud and then they can go from there to criminal. If there is not mention of the word fraud in the IRS documents–then there will not be criminal charges either.
The best way to avoid that problem is by fixing it right away. Have you brother file amended returns removing those children and any EIC. Yes, he’ll have to pay the money back, but the sooner he amends and starts paying those taxes, the sooner the issue will be settled. If he doesn’t have the money–he can make a payment arrangment with the IRS.
It doesn’t matter where the children live or who’s house he’s paying the mortgage on–take the children off the return. He can’t claim them.
Hey Chip,
There are time limits, but you’re basically out of luck on this one. Here’s a post that will give you information–won’t help your issue but knowing the score helps: http://robergtaxsolutions.com/2012/01/can-my-boyfriend-claim-my-child-by-a-different-father-on-his-tax-return-for-the-earned-income-credit/
Basically, you can claim a child as a dependent for living with you for 12 months of the year–but if that child is not your son or step son (yes, you have to be married for him to legally be your step son) then you can’t claim him for EIC. It’s probably EIC that got you into trouble. You can’t claim the child tax credit either.
There are time limits on those audits so it’s quite possible that the audit is over and closed and the IRS has assessed the tax–then it’s too late. But, if it’s not over–and the only way to know if to just call–then you can amend your return and pay the tax that’s due.
Your biggest issue will be paying the tax. If you don’t have the money, you can make a payment arrangement. (Bottom line, figure the amount you owe–tax plus penalties and interest, and divide by 60 months. The IRS can compute the penalties and interest for you. That’s what they’ll expect the monthly payment to be. If you can’t do that, you might want some help negotiating the deal, otherwise you can save yourself some money and handle it alone.)
The hardest part about your case is the family thing. You think of the child as your step son, you love the child like a son, so you behave like a father. That’s the way it should be. The IRS is not like that–they have very strict definitions of what family is and isn’t (I guess they have to.) That doesn’t make you a bad person, it just means that you have a more open and loving definition of family than the IRS does. That’s not really such a bad thing now is it? (I wouldn’t be worried about jail, only IRS taxes and penalties.)
I’m hearing a lot of different situations regarding tax fraud/EIC but just one thing should be said. To all those people saying they didn’t work, they have children and want to let someone else claim their child to get the EIC; it sounds to me like greed and desperation. EIC is earned income credit. First if you didn’t EARN anything you don’t get a credit. Also, the qualifying questions. #1 Did you support the child for 6 months? How can you sleep at night knowing you lied to the government for your own personal gain. Saying you supported a child ( yours or not) when you didn’t in order to get a refund or the most money is NOT OKAY! if neither of you worked that doesn’t mean go find a friend or family member who will claim your child and give you a % of their refund. I struggle and work hard. Tired of peoples selfishness and ignorance.
I’ve taken care of my daughter for 14 years, spent 7 years fighting for sole custody to finally be granted sole legal and physical custody in Dec. 2010, my daughters father hadn’t even seen his daughter from April 2010 to Aug 2011. I just found out he tried to claim her this year. He has done this before. I filed paper return and got my refund. I also filed documents regarding our child custody case through the courts and found him in contempt of court 30+ times but dropped it bc I don’t want to see him go to jail. I guess I shouldn’t care but I have had my share of f’d up situations. I just wanted him out of my life! I don’t want his money but I do need it.
My brother lived w/his gf from 12/09 to 8/2011. He claimed her 3 children on his 2010 and 2011 return. He got a letter last week becuase he 2011 return is being audited. He filed his own return and listed the children as nephews instead of “other”. He can not provide medical records or school records that the children lived with him because he’s always used the home address of the house he has a mortgage on. That house is not a rental property, but his estranged wife lives there and pays the mortgage. He uses that address becasue he claims the interest on the loan. Before his 2010 return, he has never claimed children or received EIC. What kind of legal issues is he facing?
I was audited for claming my girlfirends son which is my step-son or is to me im not sure if we have to be married for me to call him that and if so thats were i made my mistake. The real problem is i had moved and my mail was not forwarded to me and i recieved one paper on this stating this was going to happen but never recieved anything else as i was not getting my mail. Now a year has passed and recently found out this issue was not resolved do i still have time to resolve this issue or is there a time limit. Also is there a form my girlfriend can sign saying i supported her kid for the year cause this is not fruad i did support her son and was the only one bringing in any income so im not sure how they can say this would be fruad.
Hey Sendy,
So you’ve got a bit of a mess and you need to sort it out. Here’s where you can find local help: https://portal.naeacentral.org/webportal/buyersguide/professionalsearch.aspx
That would be help you pay for–but in your case I think it would be money well spent. There are free places, and the IRS can help you for free–but you might not want to go there if you catch my drift.
Here’s what you want to do:
1. Figure out who should really be claiming your child on their tax return. Use the IRS website: http://apps.irs.gov/app/eitc2011/SetLanguage.do?lang=en
Make sure you answer all the questions honestly–only you will see the answer so don’t be afraid.
2. When you know what’s right–(I’m guessing, the right thing will be for you to claim your child since you work–but I don’t have all the facts, that’s why you want help.)–when you know what’s right, then you start to fix things.
For example: if you should claim your child–file an amended return, if it was your brother who should claim–back him up, if your ex should claim–at least know you’ll lose the case. (Maybe your parents should have claimed? I don’t know.) Knowledge is power–even if it’s not to your advantage–knowing where you stand sets you up for the battle.
3. Now–once you know what the right thing is–you have to act accordingly. You know you’ll need to fix the tax returns–but did you harm anyone? For example: did you let your brother claim you child when he shouldn’t have? If yes, you’ll have to make things good with him when he amends his return. If he claimed your child against your will–that’s a different story.
Will you, or borther or your ex wind up in jail? I really don’t think so. You and your ex are the parents, so I’m not thinking you did anything illegal. I could make a reasonable claim for your brother. If he really shouldn’t have claimed–well then he’ll have to pay back the money, but I wouldn’t worry about prison.
hi my name is sendy and i have a concern my brother claimed my son as his nephew and the bioligical father tried to claim but they told him somebody had claimed him so now iam afraid their mught be any problems iam residing at my parents house for almost 3 yrs but my brother never helps me with any costs on my child i work so i buy any costs for my child so can u please give me an advice thank you,….
Hi Virginia,
I don’t think you’re in trouble. Not at all. I don’t think you did anything wrong. Besides–the worst possible scenario would be is if you claimed your neice and then your sister tried to (and you were in the wrong) but that didn’t happen.
Now, you probably have a good case if you want to claim your neice–a really good case. So it’s really just a matter of — do you want to pursue it.
Here’s where the rules can help you or hurt you:
1. Your neice lives with you for 6-8 months–that helps you.
2. Where did your sister live when she wasn’t in Okalahoma. If your sister lived with you and her daughter, then she’ll win on the amount of time issue. In that case–you’ll lose.
If you’ve got a winning case, go ahead and paper file and do the audit stuff. If not–let it drop. But the bottom line is, you didn’t do anything wrong before and you should not be in any trouble.
My sister recently let me claimed my niece, I support her. She lives with me 6-8 months a year each year.(my niece) My sister is in a lot of trouble with the law. But for the past couple of months my niece has been living in Oklahoma with my siter. I live in Texas. My sister told me to claim my niece, so i did like I have been or the past 3 years but this year when i went to go file my taxes I was denied because MY SISTER claimed her as well on her Taxes. So me and my sister claimed the same child. I wouldn’t of done it but I had approval. But my sister betrayed me. I just want to know how to do things right. And I want to know how much trouble I’m in. Will you please explain it to me.
Hi Leannah,
You’ve got a couple of problems–1. Did your friend just claim your kids’ exemptions? or 2. Did she claim them for EIC? If she claimed them for EIC–well what did she put the relationship down as? You can’t say you’re not related and claim kids for EIC.
Now, to make it right, your ex husband will need to file an amended tax return claiming his chidren for whatever he’s entitled to. So–your problem–what did you get when your friend filed your kids? You’ll have to pay her back. You realize it’s fraud right?
But will you go to jail? I doubt it, but you could potentially be barred from claiming EIC for 2 to 10 years.
The best solution for you is to come clean and have your friend file an amended return before your ex goes and tries to claim the kids. That way you’ve got the “oops, we make a horrible mistake and we need to fix it now” advantage.
I was convinced by a family friend I had stayed with for a less then 4 months to allow her to claim my two kids on her taxes come to find out the kids need to be living with her for at least 6 months and I need to know what to do to make things right so I dont have to worry about my future anymore plus since I had no job and theirr father does he should have been the one to claim them since their his kids and rightly he can bcecause they lived with him up til our seperation in those months
@ Sally,
Well, you shouldn’t have said that he was your son. Is that EIC fraud where you’ll go to jail? No. It sounds to me like you had a legal right to claim him and as a blood relative you would have no problem proving the relationship. You could go and amend your return and change it to “nephew” and then you won’t lose any sleep over it. It won’t affect your taxes, it’s all good.
What get’s people into trouble is when then say “son” and there is really no relationship and they get all sorts of money they’re not entitled to. There’s a big difference between “oopies” and fraud. What you did sounds like “oopies” to me.
I claimed my nephew because him and his mother were living with me and she didnt work and I supported him all year. but I noticed on my tax papers they listed him as my son is that bad?
Hi Michelle,
I’m guessing that when you say your reported him that you mean you filed tax returns that have you claiming your daughters and that you filed all the way back to 2008. (Going back any further won’t do you any good.) If you haven’t done that, do it now.
Because your ex is the father of your daughters, and he’s been doing it for 15 years, I’m guessing that the worst that will happen is that he’ll wind up having the pay back and refund or EIC he got for claiming the girls as far back as 2008.
So he’d be hit with a late payment penalty of 25%, plus interest. At worst they’d tack on another 20% underreporte penalty but I kind of doubt it. They seem to be more forgiving of a parent claiming kids than if he was a boyfriend or someone else.
He may have been doing it illegally for 15 years–the obvious question the IRS is going to ask is–why are you complaining now? And, since you’ve been apart for 15 years, well then the rules were different 15 years ago, even 2 years ago, so there may be times where his filing wouldn’t have been considered illegal.
Bottom line-I would not expect the IRS to pursue criminal charges in this case.
My ex husband has been illegally claiming my two daughters on his taxes for the last fifteen years, I have recently reported him, I’, wondering whats the least and worst that can happen to him. He’s probably received over a hundred thousand dollars in that time.
You should look here: http://robergtaxsolutions.com/2012/01/court-ordered-exemptions-and-the-irs/
Hello…quick question. I have a custody agreement with my sons mother. She has been claiming him the last 5 years. Today we went to family court to decide who would be able to claim our son on taxes this year. She was going to get about $450 back more than i so it went in her favor. My question is this…what if i filed my taxes claiming our son after the decision was made for her? what possible repercussions can i face? Thank You!
Hi Sandra,
I’ve got a post about multi state returns: http://robergtaxsolutions.com/2011/03/multi-state-tax-returns/
But to be honest, you won’t have to file a California return for 2011. Do find out about your W2 from your California job though–you must put it on your federal return. If you are not being paid W2 wages, then it’s 1099 contract labor–that’s a whole different issue. Just make sure you have all of your documents before you file.
Hi Ashley,
I’m going to send you to a different post that has exactly what you need to do. http://robergtaxsolutions.com/2011/01/my-ex-claimed-my-kid-now-what-do-i-do/
Bottom line, you’re going to paper file your return. The IRS won’t tell you who claimed your child because of privacy laws, but you can probably make a good guess.
But go to the other post and follow the instructions. Good luck.
I recently completed my taxes online only to receive an e-mail to say that it was rejected. It was rejected because someone claimed my child a dependent I called the IRS to see if a) find out who did it and B) see what to do in order to right this wrong The IRS is saying they cannot reveal who did it, in fact. I wanted to know what’s the best way to go upon a situation such as this.
I have a question — I worked in Virginia while in college last year. I graduated this past May and moved to California in the fall. I started working for my new job at the beginning of December. It’s for a non-profit and I’m a live-in intern doing volunteer coordinating for 1 year. It’s $800/month & free rent, but I only started this past December. I don’t have a w2 for this job or a pay stub. I just get a check for $800 at the end of the month. For my other job, it was direct deposit with a w2 and I know how to do my taxes for Virginia. Not sure what to do with this Cali stuff. Can I just do taxes for Virginia for this year? Then next year I’ll do California since I’ll be only living/working in Cali from now on? TY.
Hey Christina,
I’m sorry, I didn’t realize I had an unanswered question sitting on the site. I apologize. Filing an amended return won’t make you look bad. People file amended returns all the time. And, if you didn’t know that that was an option for you (you’d be amazed at how many people don’t know that they can file a paper return to claim their child) well then you’re just fixing it now.
Once again, I’m so sorry for missing this before.
Hi Jaron, Sounds like you lost your EIC case. That’s pretty rough. The situation is this: no matter what, you will not be able to claim EIC for 2 years, even if you otherwise would be eligible to do so. What the IRS is saying is that you made an error on your tax return and it was due to (and I’m going to use the IRS words right out of the book here) “reckless or intentional disregard of the EIC rules.”
Basically they’re saying the you claimed EIC and that you knew better. Now if they decide that you were committing fraud–then it will be for 10 years.
So here’s the question for you–you say that you’ve already paid all your fines. When you look at the paperwork about the fines–were they late payment penalties and interest, or did they attach penalties for fraud? That’s pretty much going to tell you which way the wind is blowing on that one. Sorry.
I got a letter saying I would be penalized from receiving EIC for 2-10 years. I have paid all my fines but how do I know how long I will be penalized for?
I understand every thing you’re saying but what if the actual father claimed his son even though he never lived with him and never gave child support. If I file an amends would that make me look bad.