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
my daughter moved in with me feb 2010. she was 21. she had a son that year. she also turned 22 during the year. she didnt work because i was trying to get her clean and have a healthy child. i claimed them and the IRS approved it. They lived with me until august of 2011. again i had fully supported them while they were here.
i filed my taxes claimed HOH and the EIC. I made 12,000 for the year. I got a notice i am being audited. i have absolutely no receipts as i ended up homeless in november of 2011 and i lost everything and could not haul around a box of papers. i am a receipt saver for return and budget purposes but again couldnt keep anything but my clothes and a few personal items I had no idea I would ever be audited as i had no idea anything could be wrong. Now IRS wants clothes receipts rent receipts, etc i can get the rent printout proving that…i used a pay as you go electric with a wal mart refillable card. neither keep records. i am just a little fish. im so lost. i do not do things wrong. If i ammend and remove daughter and just claim grandson would my audit nightmare still exist? i have also been told that I can do a sworn affidavit that i did provide more than fifty percent of my grandsons care. I also have co-workers etc who know i did that said they would sign an affidavit. im just lost. i have done nothing wrong. help please
@Melissa,
Honest answer, I don’t know. I’ve been told that if you fix it before the filing deadline it won’t go on your final–but if you’d already been notified by the IRS–it’s probably too late.
That said, amend now and get it over with. Less penalties, less interest, and less likely to be hit with the other fines (that I do know.)
okay thanks u have been alot of help but what if she has already called before it can be amended i would say she will go an do it asap will there all ready be trouble for her even though she did try to amened or would it be too little too late
Hey Kristi,
Thanks for the support! You should be fine getting your refund, it’s just going to take some time. Sadly, because you mailed it late in the season, it might take a little longer–it depends upon how far behind the IRS is in processing them. Expect it to take 8 to 12 weeks, and be pleasantly surprised if you get anything sooner than that. Good luck.
@Melissa,
You’re right that the parent should be in trouble for allowing someone else to claim her child–but the problem is, the real parents rarely get caught. Although I did briefly deal with a parent who did that and got caught–I couldn’t handle the case because she was facing criminal charges–(I’m not an attorney–once the IRS says criminal a person needs a lawyer.)
So yes–the parent can get into some serious trouble–but she would have to get caught, and that’s tricky for the non-parent claiming the child.
Now if a non-parent (non-relative at all) claimed kids that she was really supporting-she still couldn’t claim EIC–but she might be able to claim the children if they lived with her for the full tax year. But she’d only get the exemption–no child tax credit and no EIC.
I’d say that your friend’s best bet–especially if she’s thinking her friend’s going to bust her, is to file an amended return and take the child off. If the tax return is for 2011 and she files and amended return before April 15th–then that will be the tax return on her permanent record. Now if we’re talking about 2010 or earlier–an amended return would go on the record as an amended return–but at least is was corrected.
If she gets a letter from the IRS–it sort of depends what the letter says. If you see the word “fraud” as in “penalty for fraud” $XX–then she might want to contact a lawyer. There are two types of IRS fraud–civil and criminal. The catch is, if the IRS starts fining you for civil fraud–it can go straight to criminal and you friend will want her behind covered. If she get’s a IRS letter but it doesn’t say “fraud” — she should just be able to amend her return and pay the fines and penalties.
That’s why I recommend amending now and getting it over with. Yes–she’ll have to pay the money back–yes, there will be late fees, etc. But–she won’t get hit with fraud charges. (And that’s expensive.) And, she’ll avoid having to hire a lawyer (also expensive.)
Your friend won’t have the money to pay it back because she gave it to the mom–she’ll need to arrange a payment arrangement with the IRS. But she can probably do that on her own. The important thing is to be up front–be the one to call the IRS before they call you. It will make her life much easier and she won’t have to lose any sleep because her friend got mad at her.
Hi… I’ve read through most of the posts but just want to clarify something…
My daughters father (we were never married, nor lived together) claimed our 3 year old on his taxes. I did some homework and figured out that I just had to paper mail my return, (and I was unemployed last year so it’s not a very big return anyway), and basically wait until the IRS contacts us, correct? He has no custody of her, he only has her 24 nights out of the year, and just recently *since December 2011* has started paying child support, and still owes some back support to me. He filed his taxes over a month ago, and I just mailed mine off today. How long does it usually take for the IRS to contact us? And is there anything I can do to ensure that this doesn’t happen again? He definitely did it intentionally, he called me up saying “your gonna be mad at me, I claimed our daughter.” And he actually tried to make a deal with me, saying he’d give me some of the money… HA! Yeah right… I must have stupid stamped on my forehead lol! Thanks for your help on this forum… your doing a great job!
and how long is gonna take for them to notify her if the parent does turn her in an normally how does this go does she need a lawyer just tryin to get all the info i can to help her
i mean wouldnt the parent be in trouble for allowing and the person claiming the child really did support the kids the jail part is what freaks the person im asking for out the person didnt know how much trouble they could get into till i was looking on the internet an informed them of what i found
Hi Lori,
He’s got some nerve! Okay, I don’t know if he’ll go to jail, but really–your daughter’s out of the country and he’s claiming her? Geez! Anyway, to report fraud here’s how you get to the form: http://www.irs.gov/individuals/article/0,,id=106778,00.html
Good luck.
Hi Kay,
I’m thinking you really should amend and here’s why–you have no proof whatsoever that you made $15,000 in income–None. Now, you probably did make that much, but here’s the other problem. You can’t prove it–so what’s going to happen is the IRS is going to take your brothers off of your tax return and take away the EIC, but they’re going to leave the $15,000 of self employment income on and that’s going to leave you owing about $2000 in self employment taxes–plus your regular income tax. So you see–you’ve got a little mess there.
Here’s the IRS quiz to help you determine if you really can claim your brothers as dependents: http://apps.irs.gov/app/eitc2011/Forward_Qualifying_Child.do;jsessionid=598HPxQfg55XND9Dg22Q1ftNq0d1QPfqV0s1nTfDY1tJ88GHBj19!-297738458!-1569132604
The thing is–it’s quite possible that you could claim them–but if you can’t prove your income–and that’s where I think you’ll have trouble is proving the income, then you’re going to lose. The IRS is really clamping down on people who pretend to make income but don’t just to claim EIC. I’m not saying that you made your income up–but that’s how the IRS will look at it.
So for this year–you’re going to go to Office Max and buy one of those receipt books. Every time you babysit–you’re going to give the family a signed receipt for what they paid you. Every receipt will have a date, the name of the family, the address where you babysat, and the amount you were paid. That will give you the income records you need for claiming EIC. (Assuming you meet the other rules.)
But for this year–I’d fix you returns, just claim the $800 and be done. It’s much safer that way.
I just found out (by way of a friend) that my ex-husband has been telling people that he claimed me on his taxes for 4 years after we were divorced and has been claiming our daughter on his taxes every year since we were divorced even though our divorce paper state that I claim her on my taxes. I have not filed taxes because I moved to Canada after my divorce and I have no income as I am remarried and stay at home. I am planning on reporting him. What can happen to him if he knowingly did this to commit fraud? Could he be looking at time in prison?
My situation is somewhat like comments 66-70. I’m 19 and live in my mom’s home. I graduated high school in June of 2011, but no one is claiming me on their returns. My mom did not work and is not filing for 2011. I only worked a little in 2011, making about $800, but I did baby sit all year as well. My mom let me claim my younger brothers on my return since I paid some bills for the house and bought items they needed. On the return I claim $15,000 as self employment for the babysitting, just guessing at the amount because I kept no records. I can’t find the people I used to baby sit for because they skipped town, so they’re no help. With the EIC my return said I was to get about $5800 in returns. I have not received a payment yet, but did get an audit requesting documents from the IRS, that 22 page document you were talking about. It said if they didn’t hear from me in 30 days they will just take the EIC claim off and process the return without that claim.
After reading your advice I was thinking I should file an amend to remove my brothers as EIC dependents even though I provided for them just to simplify things since I don’t have all the supporting documents. But can I also remove my self employment claim since I don’t have any records of my earnings, and I’m not even sure what I did make?
@Melissa,
If you claim a child that isn’t yours and split the money with the actual parent–that’s income tax fraud. If that person then gets mad at you and reports you to the IRS then you’re toast.
This is why you never want to do this. You got the money–you gave it to the parent, but then the parent can turn you in and you have to pay all the money back. Plus fines, plus penalties, plus you could even go to jail depending upon how often this happened and how much you owe the IRS.
So if somebody wants you to claim their child, walk away. Do a Nancy Reagan–just say no. No matter how much you need the money, or how much they say they’ll never tell on you–something will go wrong. And you’ll be left holding the bag. Sorry.
what if the parent was ok with u claiming there child an they got half of the money but she gets mad at u an call’s the irs to report what happens to her an the person who claimed them
Hey Jeremy–
first things first–they don’t throw dad’s in jail for claiming their own children. Breathe.
Okay so you blew the social security number–the tax return should have gotten rejected. So let me ask you this–did you efile the return? Did it get accepted? You see–if it was accepted, then I think that maybe you did have the right social security number and she might not be telling you the truth and just trying to scare you.
If your return was rejected–well then no harm no foul. Nothing’s been filed.
If you paper filed and the social security number is wrong you’ll get a notice from the IRS saying that the social security number is wrong, or there’s a problem.
So–you’re not going to jail. Now–the next issue is–who should claim your child? Here’s a link to the EIC assistant–it will help you figure out if you really should be claiming your child or not. http://apps.irs.gov/app/eitc2011/SetLanguage.do?lang=en
If, after answering all the questions honestly and truthfully, you find that you should claim your son–then by all means go for it. If you really shouldn’t, then back off.
One thing to consider with your ex–if she has custody–maybe your two can split the exemption. See this post: http://robergtaxsolutions.com/2011/11/split-exemption-claiming-one-child-on-two-tax-returns-%E2%80%94-the-legal-way/
The might give you two a legal way to help you both maximize the deduction for your son and help you both out. Good luck.
@Donna,
Let me try to be gentle aboout this–you’re wondering why your daughter would claim children on her tax return that she really shouldn’t be claiming because she’s not taking care of them. I feel the disappointment you feel about her decision in the tone of your letter.
But then, in the same paragraph–without skipping a beat–you ask about claiming to be separated from your husband so that you can receive state funds, etc. Donna, your daughter learned how to cheat the government from her parents. Sorry, but that’s what it is. If you file as head of household and claim EIC benefits when you shouldn’t–that’s tax fraud–and you can get into serious trouble.
Now I’m not a lawyer so I can’t tell you about what would happen to someone lying to receive welfare benefits–but wouldn’t you just guess that it could be a real problem? Just common sense?
So Donna, I think you need to do some serious thinking about what you’re doing and the kind of example you’re setting for your grandchildren. Now I realize that times are hard and you’re trying to put food on the table for them and stuff like that–but everytime someone commits welfare fraud–you put ammunition in the hands of the people who want to end all aid for everyone. Is that really what you want?
Hi Natalia,
If you find that you need to amend–go ahead and amend now. If you wind up getting an audit letter before your amended return is process, you just call the IRS and let them know that you already amended the return. That will let them know that you’ve already got it under control and are being up front with them.
I forgot to mention she claimed as well as I did but the last number of his ssn number she gave me is incorrect. My apolgies
My question is me and my ex split up we both filed for our son on our tax returns without talking about it or asking who should claim him, my problem is the ssn number she gave me for him the last number was incorrect and I am self employed and all I will receive is for my self and him with earned income credit.? This is the first year she has ever worked and I have always claimed him and after I filed she told me she did and I am scared to death and do not know what to do please help me ASAP with this so I can make it right I would never do anything like this intentionally and I am so scared to go to jail and I am currently unable to work and have tried to file for disability. What should I do and will I go to jail because she told me the wrong ssn number?
Being in the positiion were you have to raise your grandchildren, while still worrying and trying to help their parents is rough enough, without all the confusing tax laws about who gets to claim them. I mean to me it should be obvious. We take on all the responsibilities, and financial, medical and educational obligations of the children and we work too, while the parents don’t work, never or seldom visit unless they are bumming from us too. Why should they even think they could claim the kids on taxes. Cause they need a car and we can’t afford to help them buy one? I also have a question. What can happen to you if you are legally married, but for a decade now have filed taxes and also received state funds, food stamps, health care, housing and all in your maiden name?
Claiming to be separated. But not really and nothing legal.
Also if I fail the test and find myself having to amend what should I do when I get the audit letter.
Thank you so much for everything. I appreciate your advice.
Hey Natalia,
The one advantage that you have is that the IRS hasn’t sent you the money for claiming him yet. I’m guessing the 1500 is what you would have received if you just filed as single with no dependent.
So I wouldn’t worry too much. And I wouldn’t worry about the receipts that much either. Did he live with your and you supported him? Perhaps it was so obvious to your tax preparer that you were responsible for him and that’s why they ask about receipts.
Here’s a link to the IRS website: http://apps.irs.gov/app/eitc2011/Forward_Qualifying_Child.do;jsessionid=7Qy7PmRTQGSP7khwwxJvgyQghpbCnG7kL5qdW2BQ1jQLJW0TWr8G!-474572249!1788511602
It’s a questionaire to determine if you are able to claim your step brother as a qualifying child for EIC or not. Answer the questions honestly (you’re the only one looking) and assess the situation. If you really do have the right to claim your step brother–it’s okay to stand your ground. If you don’t, then you might want to amend. (You might not need to send back the check–that might be your refund anyway.)
If you find that you’re in the wrong and do need to amend–make sure you do it before April 15th (so it’s not on your record.) Good luck.
Have to pay even if I didn’t get any dependent credit?
Hi im running into alot of issues right now. I filed my tax return as,head of household & I claimed my step brother. The only thing is I don’t have receipts or anything to show for support, I throw them out i never think to keep them plus I would of thought my tax preparer would of asked questions regarding filing dependents since they also specialize in audit assistance etc but its my fault I should of researched myself. (basically my situation is like lisa’s). The irs sent me 1500 but withheld the portion for my dependent. Im assuming im going to get audited since I checked the irs website & they said a portion of my tax is under review they will send me additional info requesting information. Im assuming its about my step brother being my dependent! If I don’t have the receipts etc I know,im going to lose! But I deposited the 1500 in the bank. So im wondering do I amend the return and send back the check? & fyi I haven’t gotten an irs notice in the mail yet. Also if I decided to go through with the audit and lost would I still
Hey Lisa,
Glad I could help. And congratulations on your wedding! Do make sure you tell the IRS about the name change. Put that in the explanation part. “Taxpayer previously filed under the name of Lisa Smith, but has changed name to Lisa Jones since last filing.”
And thank you I will have a good weekend. You too.
Helllo again. I changed my last name i got married in december of 2011 and i changed it with ssa after i filed my taxes. so do i need to let them know of the change when i send my amended returrn?? and if yes, how do i do that? Have a great weekend! 🙂
yes it is the head of household audit
wow thank you so much!!! You really made my day. Stress free!!!!
@Lisa,
Having it be for 2011 makes it so much better.
Hey Lisa,
It’s perfectly legit to amend a return because the IRS is questioning it. That’s a “Whoopsie” I missed something, the IRS found it and I’m going to fix it!
But I was thinking about you so let me ask a question–why are they asking you for receipts? This should be an EIC return–did you get the 22 page form with 8 million questions (okay I exaggerate a little but it seems like 8 million questions) and they’re asking for receipts for your household expenses? –that’s the head of household audit.
Or–are they asking for business receipts–because you’re self employed? That’s a different audit. I’m making the assumption that they’re asking for receipts for the head of household audit–which you’re not claiming now that you’re amending so that’s perfectly good. If they’re asking for business receipts because you had self-employment–then you may still be stuck in an audit. I don’t want to steer you wrong.
Head of household audit–your amended return should settle that because you won’t need the receipts when you switch your claim to single. If they’re auditing your business, you might not be out of the woods and want some professional help. I just want to make sure your behind is covered.
Assuming it’s just the EIC/head of household issue–when you file your 1040X amended return and they ask for a reason you will write: Received notification from IRS that a problem existed with my return. Upon review, discovered that changes were required. Changed status from head of household to single, changed exemptions from 3 to 1. EIC and child tax credits have been removed from the 1040.”
That’s all you need to say. Good luck.
and yes it was for 2011
ok so even if im being audited right now i can amend the return? instead of giving them the few receipts that i have??? correct? i did them online with hrblock. will they ask me why im amending, ? if they do is it ok to say that i dont have all of the things that they ask from me?? thank you so much by the way, !!! 🙂
Hi Lisa,
You’re not a crappy person. You’re a person who is trying to set the record straight. If being messy makes you bad–then I’m the ultimate evil. (And I’m not that bad, my dog likes me anyway.)
But–back to your tax problem. I think the best thing for you to do is to just amend and take those kids off. The main reason is because–even if you had a thousand receipts–it wouldn’t matter. You’re not the parent so you can’t claim EIC.
So here’s my question–when did you file this return? Was it for 2011? If yes, amend it right now, get it in before April 15th and it won’t be on your permanent record. (When I was a kid in elementary school–a long, long time ago–the teachers used to threaten us with, “This will go on your permanent record!” Do you think my whispering to Darla Johnson in 2nd grade is really on my permanent record?)
Now, if you’re talking about a back year, like 2010–then it’s too late. It will show up that you filed for EIC when you shouldn’t have and got audited etc. You’ll still want to amend and fix it–but it won’t be erased. But it will show that you fixed it–and that’s important.
hi , im being audited for claiming eic, and now they ask to show proof with receipts,and school, medical, records, etc. … the thing is that i dont have any of that i moved feb. 1st and i have so much stress at work and home, that i cant get my mind straight or have the time to look for receipts… also the 2 two children that i claimed are my friends daughters that lived with me almost the whole year last year, she didnt work, and since im single i paid all the bills and expenses, but im a crappy person because i dont save my receipts, and throw away my bills when my drawers get crowded with mail.. my question is is there a way that i can amend my return, and take off the eic, and just pay back what they send me. i hear that they are very mean and try to accuse people of fraud if they dont have enough proof, so what can i do? can i amend or is it too late??
Hey Robyn,
I’m sorry about the theft. That’s really a problem. So, the first question is–was your social claimed or just the kids? If your social was claimed, you can file a fraud form–but the IRS doesn’t do it for kids. (At least not yet.)
Now–here’s a question for you–the social security cards were stolen–but how they the thief get the birthdates? A wrong birthdate would have been rejected–so it’s quite possible that it’s not the Walmart thief, but someone you know claiming the kids. Something to think about.
You already paper filed, that’s the first step. But unless you carried around their birthdays with their socials, I’m thinking your identity thief may be a little closer to home than you think.
Hi Bobbi,
Glad I could help. To get free tax help in person, have your friend contact the local VITA office. Here’s a link to the locator web site: http://irs.treasury.gov/freetaxprep/
That’s a good place to start.
Now about owing money–sometimes you can just talk to the IRS straight up and explain the situation. You can work out a payment agreement. It will take time, but by setting up the payment agreement, then your friend will be in “compliance”. That means they IRS is happy because they are working to pay off an old debt.
It used to be, you’d take the amount owed and divide by 60 and that would be the minimum payment required. Now they’ve changed that to 72. If your friend can’t even pay that, she might be able to work something else out–but she’ll have to call.
Some of the IRS agents are actually very nice and really helpful. To be quite honest, most of them are pretty nice if you give them a chance. (If you get one who isn’t, you can always say the baby’s screaming, you gotta go–hang up and try again later. You probably think I’m joking–but I’ve done that before when things haven’t gone my way. Oops, probably shouldn’t post that on the internet.)
But seriously, the best way to deal with the IRS is to just face the problem head on.
Hi,In Sept.2011 I lost my wallet at Walmart,In my wallet was my Fl Id,
my social security card ans the social security cards doe both ofy daughters.
Recently I tried to file my taxes and was told that it had been rejected(go figure) …
I was told to send in the paper return in which I did,my question is besides the IRS doing their investigation what can I do… I know the.other person will be audited but I would like to press charges. Whoever stole my wallet has all of my information and will continue to haveit until they decide to throw it away..
I already filed a police report and has all three of our socials flagged but somehow the person was still able to claim my kids as dependents..0_0
The IRS told me there is no information that they can give me about the other person.
I really need to file charges on this person because they could be doing anything with my information…
Please anyone feel free to respond here or through email:msfalla07@AOL.com
I asked a question previously and yes you helped me with your answer. I wanted to say thank you for the piece of mind. She did knowingly let this person claim her children, infact it was her idea because she wanted more money. The person who is getting into trouble is freaking out not knowing what to do, she is has been getting letters from the IRS saying she needs to pay the money back but she can’t afford it and the parent of the kids she claimed will not help her pay the money back. This did happen in 2008 and she has been trying to solve this matter but has been unfortunate at doing so. She is really worried and I want to help her but don’t have a clue what to do. Do you know where she could start to ask for help on this matter without being charged a lot of money, because she is low income? thank you for taking the time to help people with their problems. 🙂
@Carol–
So are you saying that just because your daughter’s prison won’t report her to the IRS then you think it’s okay for her to cheat on her taxes? Listen to what you’re saying. Although I don’t think she’d go to jail over this how do you think it would look at a parole hearing if she got caught cheating on her taxes while in prison? Here’s the big question for you–what’s in the best interest of the children?
Thanks for the reply- well, she is not in a state or federal prison. She is in a womens detention center, but I do not think it is run by the state. As for the child support, they chose on their own not to use it, but instead save it for my daughter and the kids when she gets home soon.
Carol–
You have so many issues here I want to make sure you understand them okay?
One thing, you might want to read this blog post: http://robergtaxsolutions.com/2011/02/crime-and-taxes/
Since I wrote that piece, President Obama signed into law a piece of legislation required the Federal Bureau of Prisons and State prison agencies to report to the IRS prisoners who are incarcerated.
Here’s the point here–your daughter went to prison in June–that makes it impossible for her to have been home taking care of her children for more than 6 months. And it’s automatically documented. So your daughter cannot claim her children on her tax return.
Your daughter may be able file a tax return, if her warden allows it, or if she has signed a power of attorney to someone to file for her. I have a friend at another tax company who used to go file tax returns at the local prison as part of his job assignment. On the other hand, I once had to file back taxes for a man who was imprisoned and was not allowed to file while he was incarcerated. So I believe there may be different rules for different prisons. (The IRS did waive all late penalties on the grounds the man was incarcerated so that did count as a legitimate excuse for not filing.)
Anyway, your daughter needs to amend her tax return. If she does that before April 15th, then her permanent record will show that she filed correctly.
The great aunt and uncle have the right to claim both of the children. They’re the ones taking care of the children. That’s the law. Why shouldn’t they use the child support money? It’s for the care of the children. Why shouldn’t they claim their legal right to the tax refund and use the child support money? The money is for the care of the children. If anyone deserves to use the children’s money it’s them. You need to see that. The money is for the care of the children.
Hey Jessica,
Here’s something you really need to know: http://robergtaxsolutions.com/2012/01/can-my-boyfriend-claim-my-child-by-a-different-father-on-his-tax-return-for-the-earned-income-credit/
So here’s the big thing–if your boyfriend the child’s father? If no–he could be in big trouble for claiming your child those other years. So–you’ve got something to fight with.
If he is the baby’s father, then you could have a problem. I think you’re going to need some help. Here’s a link to find free tax help: http://irs.treasury.gov/freetaxprep/
You’re going to want to make sure that what you’ve done is legal. (If you lived with your sister and she claimed your child–it’s highly likely that you’re in the right and have no problem.) But there’s lots of issues to get past so get some real live in person help.
Like I said, you may not have done anything wrong–but you need some hlep sorting through the mess and making sure that you’re okay.
My daughter has been incarcerated since June 12, 2011. She has two children. She did work from Jan-June 2011. Can she claim the EIC for her kids(or at least one child, which is what I did for her)? My daughters aunt and her husband(the children’s great aunt and uncle) have been keeping my daughters children(my grandchildren) while she has been gone. I know they probably can claim the kids, because they have had them from June 12-Dec 31.(But they have had access to the child support money that my daughter gets each month, though I think they elected not to use it.)They are mad, because they can’t claim them both. The husband claimed the kids as deductions from his employer and will most likely have to repay some money. They never told my daughter this and she is just now finding all this out. Otherwise she would have let them claim them both. My daughter claimed one child and let them claim the the other child. My daughter is worried, because her aunt told her that she can not file a return while incarerated. Is she correct?
Hey Anonymous,
He won’t go to jail. He will have to pay back the IRS. If you are on good terms with your ex–you two might want to talk. You should claim head of household and EIC–if you like the ex and want good terms, you could sign a form 8332 to let him claim the exemption and the child tax credit. If he’s a deadbeat–then you don’t want to do that. Your call.
I let my sister claim my daughter on her taxes. My boyfriend claim my daughter like 1 or 2 years ago. The reason I let my sister claim her because my boyfriend wasnt working and didnt do taxes this year. Also the reason because he wont give half of the money for my daughter and wouldnt buy her what she needed, he would spent the money on hiself. My parents and sister are the ones supporting me and my daughter. But now i recently started working for I could support me and my daugther. Can he do something about it like report me and i go to jail? Hes really mad at me because i let my sister claim my daughter.
I was wondering … my baby’s daddy claimed EIC. and even though I claimed in 2010, I had him in 2011 282 tays and he had him only 83 days. Was my tax preparer right to amend it.
And what kind of trouble would my the. Father’s child get into?
Hi Victor,
I don’t think you would be audited. Also–even if you were–how could you possibly have knowledge that your ex-wife was claiming an illegal deduction? All you know is that she is entitled to claim one of your children. You claim the other three. The other three give you all of the EIC and head of household benefits that you can possibly claim. There is no need for you to even put your fourth child on your tax return because all you could claim would be the exemption and the child tax credit–which is your ex-wife’s to claim. You are doing nothing wrong.
Our decree states that she gets to claim one of our children and I claim the other three. She has never asked me to file a form 8332. I don’t want to stir up trouble, but I’m afraid that if she gets caught, I’ll be audited too.
Hi Victor–
How come you don’t just claim your children on your own tax return? That’s the easy way out of this.
Your ex-wife is not entitled to claim EIC for your children. You may allow her to claim the exemption and the child tax credit, but not EIC. You would do this by signing a form 8332.
If you are complicit in her fraud–it’s possible that you could get into trouble–but I don’t know of a parent who has been charged in a case like this yet. Readers? Anyone you know been charged with this? Please post so we have a reference point, thanks.