Filing taxes is stressful, but can you imagine having your return rejected because someone else has claimed your dependent? Unfortunately, this scenario is all too common. It typically occurs with divorced or separated parents who share custody. If your ex-spouse did not claim your child, however, it could mean that your dependent is a victim of identity theft. Due to federal privacy laws, the IRS is prohibited from telling you who claimed your child. So, what should you do? If you’ve recently tried to e-file and received a message that a dependent on your return was already claimed on another return, follow the steps below to protect your right to claim them on your tax return.
Verify You’re Eligible to Claim Your Dependent
First, be sure to double-check that you used the correct Social Security number (SSN) for your dependent. A simple typo can cause some serious headaches. If the number is correct, the next step is to verify you are eligible to claim them on your tax return.
For divorced parents, the IRS gives priority to the custodial parent unless there is a court order issued before 2009 that states otherwise. If you have joint custody and the child resides with you both 50% of the time, the parent with the higher adjusted gross income (AGI) has the right to claim them as a dependent. Non-custodial parents can generally only claim a dependent if they have written permission from the custodial parent on Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent. This includes those with a pre-2009 court order.
Three Steps to Claim Your Dependent
Once you verify you meet the requirements to claim your child as a dependent on your return, take the following steps with the IRS.
- Prepare a Paper Return. Download your completed tax return that was rejected by e-file and mail it to the IRS. It should include all required forms and supporting documentation (see #2 below) for your dependent claim. It’s important to note that processing your paper return will take several weeks and your refund will be delayed until the IRS concludes its investigation.
- Complete Form 886-H-DEP. You’ll also need to provide documentation to back up your legal right to claim your dependent. This may include school and medical records, your divorce decree, birth certificates, utility bills, and other financial records. You’ll need to show the child lived with you at the same address for more than half of the year and you provide more than half of their support. Download Form 886-H-DEP and follow the instructions for your specific situation. The form and documents must be mailed with your paper tax return.
- Respond to All IRS Inquiries. Once you mail your paper return, you may receive various notices from the IRS, such as:
- CP75A – The IRS sends this when they’re auditing your return and need more information to verify the Earned Income Credit (EIC), your dependents, and filing status you claimed. Follow the directions on the notice and reply by the required deadline date.
- CP87A – This is sent because another taxpayer has claimed your dependent or qualifying child on their return. The notice will include the last four digits of the dependent’s SSN that’s in question. If you are entitled to claim your child/dependent, do not respond to the notice. If you made a mistake and are ineligible to claim them, you’ll need to file an amended tax return. The other taxpayer who claimed your child will receive this notice, as well.
If neither you nor the other taxpayer files an amended return, the IRS will audit both returns to determine who can claim the dependent. Once you receive the audit letter, be sure you reply completely and submit all information by the response deadline. The audit process can take several months to complete, so be patient.
After the IRS decides the issue, they’ll assess any additional taxes, penalties, and interest on the person who incorrectly claimed the dependent.
Dealing with an IRS audit can be daunting. If you need help, contact Tax Defense Network. We can help throughout the audit process and file an appeal if needed. Our tax professionals will also take a look at your tax returns to ensure you’re getting every deduction and credit you’re eligible to receive. Call 833-803-4222 for a free consultation today!