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
i have a son who is 4,my boyfriend and i been together 3 years and hes trying to claim my son hes sole provider for the past 2 years he wasnt able to claim him last year cause we were unable to due to them not being blood relative but this year we are trying to claim taxes and we dont know how to file my son under as for his taxes i am unable to work due from surgery issues and we are trying to figure a way to do so legally without troubles. do you think there is a way to do so? and if so how? my boyfriend is tthe only person my son knows as dad. and he is also the only provider for the child and myself.
Hi Lacey,
If you’ve already filed and your return was accepted, your ex will have to paper file his return and start the audit process. Since your child lives with you more, you’ll win the audit if it goes to that.
There’s nothing you can do to stop the audit if your ex pushes for it, but it sounds like you’re solid on this so I wouldn’t worry. He should be afraid to push the audit because he’ll have to prove his claim.
Question: I claimed my child that lives with me 90% of the year (gone during the summer to her dad) this year (2015). Since he was upset that I claimed her the year before as well, he took her non-court ordered child support and paid the taxes he owed because he could not claim her. Thus not paying any support for months.
He has now decided to claim her on his taxes without my consent after I have claimed her already this year. How do I avoid an audit? I am legally qualified to claim her and he is not.
Hi Dannyka,
Okay first–the EIC. That letter you got basically will prevent you from claiming EIC in the future on that child (and can also affect you claiming other children.) That’s a pretty nasty IRS ruling you got there.
Now, here’s the thing. You got caught on the EIC thing because somebody else claimed that child. So–who did it? Did that person have a right to claim the child?
You may be providing all the support, but if there is a divorce decree or a child support document, there may be another parent out there claiming the exemption. If that’s the case, you can’t.
The reason I’m thinking that’s the case is–you got hit for the EIC thing.
Now, this is the really sucky part. You’re providing the support, the child lives with you, so nobody (except the mother) should be claiming the EIC. I’d bet you that whoever ratted you out claimed the EIC, even though that person couldn’t possibly do that if the child really lives with you.
So, I think you’re going to lose this battle no matter what. And I’m sorry your tax person didn’t know enough to keep you out of trouble in the first place.
But–even though I think you have a good basis for claiming the child as a qualifying relative–check out the lay of the land. Who else has an interest in this child and who might be trying to claim her? Even though you have a good case–remember that you’re going to be flagged for it.
Actually, you might want to file your return without the child, and then, later amend and claim her. This gets you your basic refund (if you qualify for one) back fast. Then, it allows you to “ask the IRS” for permission to claim the child. You amend later, claiming the exemptions stating on the 1040X: dependent was originally omitted from return as I had previously been denied EIC for the child. But, I discovered that although I am not entitled to EIC, I am entitled to claiming the exemption for child as a qualifying relative.”
I’m really liking that idea–you see. by filing without the exemption up front, you’ve filed a valid, perfect return. Then, by requesting the exemption on the 1040X, if the IRS is going to deny it, the 1040X won’t count as a “fraudulent” return. They’ll just reject. But if you claim the child up front, your return will go into the “Hmmmm-bad EIC person, let’s hold this up for weeks” category.
I hope I’m making sense. I realize this is funky logic. The best part is, if you do the amended return and the IRS approves your claiming the child, then you can file with her as your dependent in the future with confidence.
Good luck.
Hello Jan. I have a very important situation. Back in 2009 (during the 2008 year filing period), I claimed my girlfriends child on my tax return, her mother was not working and I had provided nearly all (90%) of the support for her and her child in my home for well over that tax year, they were also not the qualifying children of anyone else. I explained that to a tax preparer at a small tax office near my home, he claimed the EIC and other credits and I shortly after found out that I was not entitled to those credits. I was audited and went to the tax preparer for help and he told me it was my fault, so confused and all, I just paid the fines and penalties and recieved a letter (to the tune of me not being able to claim an EIC credit for maybe 8 years or something like that). I am not really sure about the time because I was so stressed and frustrated that I was even going through this situation. I wanted to know if this child could be claimed as my qualifying relative? I have no intent to fraud or anything like that, I simply would like to receive the tax break if it is due to me. I have been taking care of this child since late 2007 and she lives with me in my home. Also due to my being audited is there any forms I need with my return with claiming a qualifying relative, if this is possible at all. I am happy I came across your page, you really know what your doing.
Hi Kriss,
I can’t tell exactly what happened as I don’t have the IRS notice or anything like that. Here are a couple of possibilities, but remember, I’m only guessing, okay?
-maybe since only one social security number was off, she did claim one of the kids on her return
-maybe, she would have owed anyway even if she didn’t claim the kids and that’s why she’s getting the 2400 bill
-maybe it’s a combination of both of the above
So I’m thinking, she probably would have owed had she not claimed the kids and since she thought she’d get a refund for the kids she didn’t pay so now the IRS wants their money.
HELLO QUESTION I HAD LET MY MOTHER IN LAW CLAIM MY TWO KIDS BECAUSE SHE HAD HELPED ME OVER THE YEAR BUT WE DIDNT LIVE WITH HER. WE HAD TO GO BACK TO THE PREPARE BECAUSE ONE OF MY SONS SOCIALS WAS WRONG . SO THAT OPENED A BIG CAN OF WORMS. SHE DIDNT RECIEVE ANY MONEY FOR THE BOYS SO I WENT AHEAD AND FILED MY TAXES IT GOT REJECTED AND THEN I SENT THEM WHAT THEY WERE WANTING FROM ME TO SHOW PROOF TO ME BEING ABLE TO CLAIM THEM I GOT THE MONEY FOR THEM BUT NOW SHE WENT TO THE IRS OFFICE AND THEY WANT PROOF WHICH SHE DOES NOT HAVE THEY STATED THAT IF SHE DIDNT HAVE PROOF SHE WOULD NEED TO BE 2,400.00 BUT I DONT UNDERSTAND WHY IF SHE DIDNT RECEIVE ANY REFUND FOR THEM.
Hi Maria,
As I read your story I see two lines that scream out to me. The first is: he left you starving with your two boys. The second is: He says you only have physical custody.
Girlfriend, both of those two lines make you win.
Here’s the thing. When you are claiming children on your tax return, the most important issue is being the parent. Hey, you’re both the parent of one of the children, right? So the next issue is, who does the child live with. And that’s obviously you.
Physical custody means–who is the child living with. That’s you!
Now, as you fight things out in court, you may switch who gets to claim the exemption each year, but the physical custody part determines who gets to claim EIC. Even if your ex gets to claim the exemption, you get the EIC because your son lives with you. You’ll want to read this: http://robergtaxsolutions.com/2011/11/split-exemption-claiming-one-child-on-two-tax-returns-%E2%80%94-the-legal-way/
So you document that says you have physical custody basically gives you the win with the IRS. He can visit 50% of the time, but it sounds like your child sleeps at your house.
Line up your paperwork, but it sounds to me like your son lives with you. That’s the bottom line.
Oh, one more thing- your ex can’t claim the daycare expense even if he pays it. Sorry, but only you can claim that because your child lives with you. Not to be a witch, but just sayin’.
Hello im not sure if im on the right page but i received a letter from the irs about someone else claiming my son on his income tax for 2013 (his father) actually last month which i thought was pretty odd. I was thinking maybe he delayed mailing his return out bc he found out i had claimed him this year. Previous years (when we were together ) i let him claim my son bc he always owed taxes and i have a son from another man who i have full custody of. Before i broke up with him he left me thousands of dollars in debt behind on loans in my name rent while he was living with us and was pretty much left starving with my 2 boys. All he has proof of paying for is for daycare expenses that he claims every year. Plus since the daycare is on a military base where he works at the address is his (only proof of adress) i guess my question is can he prove that the child lives with him just by that? I havent gotten any other paperwork besides this initial one but since the break up we’ve gone to family court and he does not pay child support we have joint legal custody but it states i only have physical custody(which i dont understand because) we have 50/50 visitation rights as of june 29th of this year. Since then i have signed him up for kindergarten so school and medical records are both currently at my address. I understand that with this new court order one of us will have our son one more day out of the year so it will be every other year. Should i make an amendment even tho i dont think i should and although i tried to talk to him about an agreement he has refused bc all he cares is about the money. Do u think i have a good case? Cant sleep much amd am worried about owing the irs money if they take this one and only daycare address as proof. Help please! Thank u for ur time!
Ex #1 only claimed them as dependants, no eic and filed single. As for ex #2 he had some nasty things to say before court because his efile got kicked back because ex#1 got his taxes in first. I told him I didn’t claim them that their father did that it was his year to. So he must of printed them out and mailed them in. Its has no transcript on me for 2013. Could it be because ex #2 taxes haven’t been processed yet because of the kids getting claimed twice? More than llikely he is trying to get the eic because he has made comments about paying off his loans that he took out for his divorce attorney with the tax money.
PS: I’m sorry Sherry, you sound like a nice person. That last bit wasn’t really a nice thing to do. I am not always a nice person. Sometimes nice people need to know what not nice people would do. Forgery isn’t nice. In fact, it’s a crime I just wanted to make sure that a nice person like you knows what her not so nice options are. 🙂
Hi Sherry,
Okay so ex number one is the biological father of your children. Ex number 2 was your lawful husband as of 12/31/2013–right?
So, ex #2 does have the right to claim your children as his dependents on his income tax return–but you probably should have signed it. Which I’m guessing that you didn’t otherwise you’d know he claimed them.
Here’s the thing–as you husband, he lived with the children for at least 6 months. So he can claim them on his return. But–he can’t claim EIC if he does the married filing separately status, and he can’t claim head of household because you lived together for 3 of the last six months of the year, so he could only legally file married filing jointly to get EIC.
Meaning–either he forged your signature, or he claimed head of household even though legally he doesn’t qualify.
Now ex #1, he can only claim your kids as dependents, he can’t get EIC no matter what since the children do not live with him (they live with you.) Even if you sign the 8332 form, that only allows him to claim the exemption, not the EIC.
Since you supposedly signed the tax return, you can get a transcript from the IRS–which would give you the information you need. If the IRS says they don’t have anything with your social on it, then you know that Ex #2 filed as head of household or MFS. But I’m guessing he wouldn’t do MFS since there’s no EIC to it.
If Ex #2 forged your signature he should make it up to you. I mean, if you were to file a zero balance return as married filing separate and claim the children yourself, well, that would mess up his head of household or married filing jointly return wouldn’t it? So, you see, you do have a little leverage here.
So my ex and I separated in September of2013. But the divorce wasn’t finalized till April2014. I didn’t file taxes because no income. My children father claimed them. He called me telling me he got papers from the IRS. Someone else claimed the children also. I’m assuming it is my ex husband. Was he legally able to claim them even though we were separated? They are not his children. And they lived solely with me since we separated. Wouldn’t he have at least of had to inform me that he was.
Hi Zeta,
You are the children’s aunt. They live with you. The mother is not claiming them. Not only is that not fraud, it sounds like a legitimate claim.
Here are the rules:
The children need to live with you for at least six months of the year. So if you are being audited for 2013, they needed to live with you for at least 6 months in 2013. So even though they are not on the lease, you will need to prove they live at your address.
School records are the easiest proof, but doctor bills, or shot records are good too. Whatever you’ve got that shows the children live at your address is what you’ll give to the IRS.
I’m guessing that someone else is also trying to claim them. Usually it’s the father. But if the kids don’t live with him, then you should be okay.
I’m getting audited 10/08/2014 for claiming my niece and nephew my sister don’t work she and her kids live with me but not on my lease I help her with her kids buy them things that they need when we do get the income check I buy them moor things like lab top for school my sister don’t get child support is that fraud
Hi Chris,
First, I would get a lawyer. My first question would be:
Who’s bringing you to court?
The reason I ask that is the IRS usually won’t do that unless the dollar amount is over $40,000 (per year of taxes.) Whatever you got for the EIC would be less than that.
Now, if you really were in the wrong, then it might make sense to amend and be right with the government, but I can see this turning into you having to pay the government back and whoever is suing you–and that would be double paying.
You’ll have to make it right, I just want to make sure you protect yourself. You should only have to make it right once.
So I just got a called that I will be getting a paper to appeared in court or summoned etc for 2 counts of frudelent activity the reasons is that I illegally claim my younger bros as dependents on my EIC from 2010 till 2013 I know what did was wrong so my question is should I do one of those amend paper back to the IRS or what other choices do I have
Hi Jane,
I think this post if for you: http://robergtaxsolutions.com/2013/12/how-to-file-a-tax-return-when-you-have-no-income-and-why-you-might-want-to/
About going to jail for the tax fraud–I spoke with a real treasury agent about that. You know the IRS guys with guns and badges. Because I kept hearing about these guys committing fraud and never getting caught, never being punished. But you always hear about movie stars going to jail for taxes.
What he told me was that they don’t even look at a case unless the tax bill is over $40,000 (for one year.) Your boyfriend doesn’t come close so I wouldn’t worry about him going to jail. The worst that would happen is that he’d have to pay back the EIC with penalties and interest.
But you’re probably looking more at preventing him from doing it in the future–that’s why you want to see my other post about filing a tax return even if you have no income. What it does is put your kids on the IRS radar and block him from claiming them for EIC. And that’s what you really want.
my ex claimed my 2 boys ages 21 and 12 without asking me.I lived away from him over 6 months in the past year.also The boys are not his kids .He went behind my back after leaving me and filed.I would not have known if he didnt leave a paper in his office showing the tax info.I called a criminal lawyer and he told me i could not sue my ex .Unless by him claiming my boys i lost money etc.I get ssi as im a widow.So i dont file taxes because thats my only income .I was told by the lawyer my ex could be charged for fraud and identity theft and serve time .I read the authorities have up to 3 years to charge my ex l have not turned him in because i dont want him in trouble.What should i do?I recently found out he claimed them the last 2 years without my consent.I supported my kids too.My income is enough that i never needed anything from my ex the last few years.I bought the food and paid bills on my bank card etc.So he did not provide for my boys . I was so upset once i realized what he did to me and my kids.
Hi Kristen,
I don’t know where to get good advice on food stamps and child support for California. I’m posting your question in case anybody else reading this has a recommendation.
Now if someone posts the answer, it won’t go up automatically. I have to review posts to make sure it’s not an add for a porno site or anything like that. (You wouldn’t believe some of the stuff that folks try to post!)
But if anybody knows where to get good advice on food stamps or child support, please send me the link and I’ll pass it on. Thanks.
Hi Jeff,
Don’t worry about the 6 months issue–the baby was born in August so that’s an exception to that rule. You’d be fine there even if the baby was born in December.
Head of household is the part that will be tricky–although in my book you should be okay.
Here’s my first question to you–do you even need to be “head of household”? For lots of people, their refund is the same filing head of household as it is filing as single. If that’s the case for you–go ahead and claim single (keeping the exemptions of course) but file single–that get’s rid of the head of household issue.
But you’ve still got the EIC portion of the audit left and that’s similar to the head of household issue so let’s deal with that.
Wait–before we go there–I’m thinking that the only reason you’re getting audited is because somebody else claimed that baby. You might want to find out who. If you’re in a household of other people–look at your housemates. Don’t overlook the Daddy–(that’s the most usual suspect), and don’t forget the baby’s grandparents (even the ones the child doesn’t live with.) Basically, anyone who’s ever seen the child’s social security card could have tried claiming him.
Okay, back to proving support–Here’s an IRS quiz to help you determine what your filing status should have been: http://www.irs.gov/uac/What-is-My-Filing-Status%3F
Make sure you answer the questions completely honestly. If you don’t come up with head of household, then don’t use that tax status. You can still get EIC even without claiming head of household. You may lose some money there, but not much compared with losing the EIC.
Proving your bills–okay so you pay rent on a cash basis–who do you pay? That’s pretty easy. If you really pay your rent and you pay cash, the person you pay should give you a receipt. Maybe you hadn’t been getting receipts in the past because you had a good relationship with the person you paid. But given your situation now–you need them. And you should be able to get that from whoever you paid the rent to.
Good luck.
Do you know a website that has advise/information on the food stamps/child support issues? I’d like to find someone just like you that can help me with this. I am so curious to know if this could hurt us or help us. I think in the state of California if the custodial parent gets any kind of government assistance that the non-custodial parent has to pay it back. I am not 100% sure, so I am looking for that information. If you know of any website that could help me, I would be grateful for your help.
Thanks again!
Hello, thank you for taking the time to read my post. In July 2013 my sister broke up with her boyfriend and as a result her and her daughter moved in with me. Two weeks later her son was born. She didnt work in 2013 so her boyfriend claimed the daughter and I claimed the baby son which she was fine with. We both live and rent with family but I pay her portion of rent and give her money for food, baby clothes and other expenses since she is not working and going to school. All of which I generally pay cash for. The IRS just sent me an audit notice and want to see supporting documents for the following. Dependency Exemptions, EIC, and Head of Household filing status. We can prove relationship and residency, that is no problem. One thing that concerns me is that the child did not live with me for 6 months since he was born in august. Also I don’t know if I will be able to prove head of house hold since I rent on a cash basis and bills aren’t made out to my name even though I pay them. What do you think about this situation?
Thanks,
Jeff
Hi Kristen,
I think I have a solution for you. You can’t claim EIC so you only need to claim the exemption for Lisa. Lisa’s mom can still claim Lisa for EIC and head of household status.
I think you’re right, have Lisa’s mom sing he 8332 and you amend your return, only claiming Lisa for the exemption–it shouldn’t even change your refund, but it will free up the exemption for the mom to claim her for EIC. I don’t know about the food stamp issue–but they do get tax document information so I’m guessing it might clear that problem up for her.
Hi Kelly,
Sounds like the smartest thing you ever did in your life was to get away from that loser!
Here’s another smart thing. just drop it. Those tax years are over and the IRS isn’t going after old stuff. He’s not worth you wasting one minute of your energy over. Since you were divorced, his bad behavior should not affect your old tax returns. Since you had no income then, there should be no harm to you.
Focus on your kids, your new business, and your life. The best revenge is living well. I hope you get plenty of revenge!
Hi Annie,
I can’t tell you what to do. He claimed your kids, but he’s paying you back with free rent. But–it’s against the law to claim for him to claim your kids for EIC if he did that, that’s EIC fraud. Since you’re taking money from him for it–you’re guilty too. If you turn him in, what are you going to say?
Whether you turn him in or not is your decision. I hate to give you this cop out answer but for next year, if you haven’t turned him in, you want to make sure you file your tax return early to keep him from claiming your kids for 2014.
to add to my previous post. I want to let you know that I have come to your website for many years for advise, your are very helpful, so thank you. I just realized that I am posting under a specific question, which I don’t think relates to my situation. Thinking about it, I never filed an EIC form, because I prepare my own taxes and because I made too much money. So, in regards to my previous post, if during 2012 the custody was 50/50 (legally im not sure, see above) and the mother verbally agreed to letting us claim Lisa, is it ok for us to do so, AND if the mother got food stamps that year can she get in trouble? Can she change her mind about us claiming Lisa?
yesterday, my stepdaughter< Lisa< told me that her mother got a letter from monterey county (California) stating that she fraudulently received food stamps for Lisa and is being investigated. My husband and I went through a very rough custody battle for Lisa. We had custody of her from 2007-2011. They paperwork to change the custody was dated OCt 2011, but signed Aug 2012. What is the effective date? I ask because I claimed Lisa on our 2012 taxes, the mother said it was ok, and I was thinking it was ok becuase we had legal custody over half the year (i.e. the aug signed date). But now i am wondering if I should get her to sign the 8332 document and send in an amended return? I can only imagine how long she got food stamps, either during the time we did have custody or the gray area between Oct and Aug. Maybe this is all jumbled, but I am wondering how she was sited for fraud, and if it could have to do with my claiming Lisa? How does the county get their information, etc.
I just found out that my ex husband, who was very physically abusive, during the time I sought asylum in Reno, Nevada after his last beating ( broke both my arms), was filing for EIC on our three children. This occurred in 2002, 2003, 2004, 2005, and 2006. We had seperated prior to my moving 1800 miles away. I did not file income tax those years as I lived off of a small social security check for me having leukemia at the time, and public assistance. I am furious with the man, who is now telling my 16 year old he should have killed me when he had the chance. She refuses to visit him any more. I found this out because I was getting my affairs in order to start a small home business, I joined the military after I went into remission and was injured in Bagdad in 2008. Please help me, I feel, violated by this man again.
re tax fraud etc.
My ex boyfriend went behind my back and claimed my oldest boy 21 and my 12 year old.I caught him because he left a bank statement open on the desk in his office..My ex did this after he moved out.The law was here when he left because he was acting out. Regardless i told him to amend his taxes.He told me i would not owe him rent for the summer months.He did not give me a receipt,.im worried he will evict me.Im also worried ill lose medical coverage for my boys. But im concerned he will not only go back on our agreement, but claim my kids again.Also my oldest son is challenged mentally.He did not give permission to my ex. So im wondering if i should turn him in?
Hi Brian,
I wish you would report him. It’s people like that that cost you, me, and everybody else a lot of tax money. I pay the IRS to get an ID number that I must use on every return I prepare. If I screw up, they can pull every return I ever prepared and audit my clients for other mistakes. Your roommate, who is genuinely scamming the government goes by untouched.
So I for one, wish you would report him. You’d be doing me a favor. Thanks.
Hi Theresa,
If you have a job and have income and you are supporting your son, then you may claim him. He’s your son.
Now, if you’re living with your mother, maybe it makes sense for her to claim him. But, she should be coming at that from a point of respect and not, “hey, I already claimed him so you can’t.”
Here’s an IRS link to help you decide if you should be claiming EIC: 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.
Hi Edwin,
If you have custody of your sister’s children–if they live with you and you are supporting them, then you should be able to claim them if they have lived with you for over 6 months.
If not, then you’ll have a problem.
Hi –
I am trying to get some feedback on how tax preparers get away with so much fraud. I have a roommate that is a tax preparer and a few years back he wanted me to help him get organized because he wanted to open a second location. He actually worked out of his home.
During the first week of volunteering my time , cleaning the office and answering phone calls, I noticed that a lot of people were calling requesting to get their taxes completed. He gave me instruction to tell them where to send their information. I noticed some people faxed information while others didn’t. It talking with a few people, most would tell me that they do not have anything to send in and that he would “hook the taxes up”. I later found out that he was making up tax returns saying that that the clients were self employed with barbers, hair stylist, home health care or entertainment as their line of work. I could not believe that so many people were calling in and they didn’t work ANYWHERE. With a schedule C and a couple of dependents, these people were getting back 6-7k easily. A lot of times the dependents weren’t really theirs to began with. I question him on it and he said he has been doing that for a while and nothing has ever happened. As long as he doesn’t sign them then he is not responsible. But get this, he is an ERO and processes them all through HIS processing bank. In addition he says he makes a killing because he doesn’t really report all his income to the IRS so he can get back a big refund by using someone else dependents. These kids do not live there because I’m his roommate. I don’t see how he gets away with it for all these years. I know for a proven fact that he understated his income by 75K in one year. 90% of his fees are paid through his processing bank. He doesn’t submit his own taxes like others through his tax software or processing bank. He doesn’t want them to suspect anything so he submit his using TurboTax online. He brags about it all the time. All of this is wrong on so many levels. From underreporting to overstating expenses, you name it. I am moving out because I cant deal with this level of integrity and lack of ethics. I am a tax payer that gives Uncle Sam about 18k in taxes each year. I just don’t think its fair that people can get away with this while others have pay. I am thinking about reporting him. He has went as far as to call me stupid when I try to step in and say something.
my mom has claimed me and my son for the past 2 years and every time I went to file taxes she would say well I already claimed you and carson so you cant. I said I would do it anyways or go talk to an attorney and she always told me they wouldn’t do anything about it and yada yada and of course I believed her. well 2014 taxes will be right around the corner and she says she is gonna do it again. I done my research that she cant do it and she can get in trouble for doing so. so do I still file a report from the previous years that way she cant do it again or what? I really don’t know what will happen and etc
Hi Tong,
So you claimed 10 kids on your tax return this year, plus you were supporting their parents. That’s a lot of work.
I’m guessing that the state is questioning you because–well, here you’ve only claimed one child before (yours) and now you’re claiming 10. It’s a major change and it looks questionable. Even thought I believe you’re in the right–you’ve got to understand what it looks like on paper. “I just added 9 kids to my family this year…” It sounds more like a tv sitcom plot than a tax return.
So time to get your ducks in a row. First, you say that the state is questioning you, not the IRS. This is my first “hmmmmm” – why the state? Usually the feds are the first to jump on this stuff.
From what you’re telling me, you’re in the right as far as the IRS is concerned. The children lived under your roof, you supported them, and their parents, and the parents don’t have any income so they wouldn’t claim the children on their tax returns anyway.
I’m afraid that I’m going to answer your question with more questions:
1. Did either of the parents file a tax return claiming the children? If they did, the parent wins the exemption over another relative–unless the children did not live with the parent.
(Now, if the parents made money and didn’t tell you while you were feeding their children–well that’s pretty low.)
2. If neither parent filed a return claiming the children, then you’re going to need them to back you up–since you don’t have documents about the kids living with you.
Here are the potential problems I see:
1. You mentioned driving the kids to school. So I’m guessing that the kids were living with you but going to school in a different school district. With school funding being so tight–could that get the kids kicked out of their school? You wouldn’t want that to happen?
2. Were you or perhaps one of the parents receiving state benefits because of the children? For example food stamps? Welfare? Since you’re saying the issue is with the state, if could be that your return got flagged because the parents are claiming state benefits because of the kids–and you having them on your return raised a flag there.
So my short answer is: have the parents write letters stating that they lived with you for that period of time and they didn’t make any money and you supported them etc and have it notarized and send that to the state. It’s not the best documentation, but it’s the best that you’ve got.
Good luck.
Hi Dee,
I also answered this on “My Ex Claimed my Kid”. I’m just going to copy and paste here in case you don’t find it on the other post:
Hi Dee,
There’s nothing wrong with working together to get the best tax situation for your family–and that’s what you’re doing. The reason the IRS is asking questions is because you’ve changed who is claiming the children, they’re just trying to make sure that you’re not committing a fraud–and you haven’t.
I would not claim head of household since the children’s father makes more than you do and you also live with his parents. Claim single instead.
Just send the IRS the information that they are asking for. You might wind up sending them a copy of the father’s 1040X also with a letter explaining the situation.
Usually, I prefer dealing with the IRS through the mail, but your case might be helped if you can go in person as a family with your documents and talk to a human. You don’t have to–but if there’s an IRS office that’s convenient to where you live, it might make things a little easier.
Bottom line, you haven’t done anything wrong.
And if its wrong for me doing that can i fill another amendment? or should i just go ahead and send them the information they need and see what happen?
so me and my baby daddy file our taxes. He claim our 2 daughter and got $6,400. But if i was to claim them then i would get $8000. So we both fill a 1040x , we took the 2 child out and i claim them on mind. I got a letter that i need to provide proof of the child living with me. I called the examiner and she ask me why did i fill the 1040x and I told her that because i would get more if i claim the kids. She was saying that, that may be a fraud depending on who audit my case. But how and i called the irs before i file the 1040x and told them the reason why i want to do it and they say it was ok. Also I told my tax preparer and also his and they didnt say that it would be wrong to do that. Please help advise me!!!
can I amended it now or is it too late. Will I go to jail. I always paid my taxes and I would never have claim them if they didn’t live with. Thanks again
I filled a return for 2013 claiming my nieces and nephews and there was 9 of them plus my son which makes it 10 kids all together. I would not have claim them but they did live with me for 7months last year a long with my their mother because of their marital issues. They just left back home this January 2014. I claim them cause I did support them, giving them rides to their school, buying them clothes and food and it was not cheap. The problem I have now is that I receive a letter from state that I need to provide proof but I can not provide proof cause everything was still at their old address only. The only proof I have is that both of the parents did not work at all last year and just their word of mouth. If I knew that helping them would get me into so much issue, I would still help them but not put up with it for 7 months. Please advise me to what I need to do. Thanks.
Hi, i just found out about this blog, what i would like to know is if i woul be in problem for claimin my sisters kids (2), they are acctualy aut the contrt but the perso who filled up for me , toldme it was possible
@Kayla,
at least it means that they have accepted the returns and processed them, so I’m thinking that’s a good sign.
I was able to order transcripts for 2013 is that a good sign i ment to add in last message! im the one where uncle claimed my little girl
@Kayla,
I hope you get your money soon too. Good luck.
hi thank u and yes he is my blood uncle im hoping we will get refund this week. and no one else has claimed her no one has her info i just let him this year to help me out but yea i chekced the irs site and all the bars are gone and it just said its processing and will give you refund date so im sure we will have a ddd date this week. just stressing cause could realyl use the extra money right now and yes we all did live together. also my ex cant claim her he dont have her info and i have not spoken to him in 2 years thats why i was leeting my uncle claim her this year to help me out next year ill be able to claim her my self since im working now. i just hope irs will give th emoney this week hate wating. i did call irs one time and they said it was processing didnt say anything was wrong , and i would think we would of got a letter if was bad so thank u so much for your help. i just need to stop stressing and im sure they will ddd the money soon.
Hi Kayla,
Since you have gotten no letters, I wouldn’t worry too much. Your uncle lived with you and your daughter and he did support you so it sounds to me like he has a legitimate claim.
Most likely, the IRS is just holding his return a little longer because he hasn’t claimed her in the past so it is a red flag–but red flag doesn’t make it wrong.
The only thing I would be worried about is if you have an ex that claimed her, but if that’s definitely not the problem I wouldn’t worry about it. The IRS is just being extra careful.
Actually, since you didn’t work and he is your uncle–then he could claim an exemption for you as well.
Now just to clarify things–1. your uncle has to be your real blood uncle (I used to have a “Grampa” that wasn’t related to us at all, but I always thought he was real family.)
2. Your uncle needs to actually live with you and your child for more than half the year (or the child needs to live with him anyway.)
So if you don’t actually meet those requirements, then you could have a problem.
But I suspect the IRS is just waiting to see if you submit a return claiming the kids more than anything else.
HELLO I HAVE A FEW QUESTIONS I LET MY UNCLE CLAIM MY LITTLE GIRL BECAUSE I DIDNT WORK AND WAS NOT ABLE TO CLAIM HER AND HE HELPED TAKE CARE OF HERE THE PAST YEAR WE DID HIS RETURN FEB 3RD HAVE NOT GOT NO LETTERS OR ANYTHING ALL THE SITE SAYS IT STILL PROCESSING AND WILL LET YO KNOW A REFUND DATE SHOULD I BE WORRIED HERE IS IS FEB 23 2014 NEED INFO AND THERE IS NO CODES ON THERE THAT SAY CALL HAVE NOT GOT NO LETTERS IN THE MAIL…
Hi Jo,
He won’t be facing any charges, but he will be expected to repay the money. There could also be some interest and penalties. If you’re talking about a 2012 tax return it could be 25% or even more because of the amount of time. If it’s this year, the tax deadline hasn’t come yet so the late fees wouldn’t apply.
Hi Desiree,
Your boyfriend is not your children’s step father. He can’t claim them for EIC.