Two Parties Claiming Same Dependent

[artbuc]

What is the name of your state (only U.S. law)? DE

Divorced parents have two minor children. Mother has rightfully been claiming both as dependents because they both lived with her. In 2009, both children started living with Father (one on Jan 9 and the other on June 19). As I understand it, Father is legally entitled to claim both children on his 2009 Fed 1040 as they meet all IRS dependent tests. However, Mother has made it known that she will continue to claim both children.

I talked with the IRS to ask them what Father could do. IRS told me that Father could do nothing to preempt a problem. Nothing will happen until the children are claimed for the second time. Then, both parties will get a letter asking them to prove that he or she is legally entitled to claim the children. IRS said it makes no difference who files first. Just because you file first doesn't mean you are more or less entitled to claim the children.

I asked the IRS if it would be helpful for Father to include his proof when he files. They told me it would not make any difference because nothing happens until their system "sees" that the dependent has been claimed twice and then both claiming parties get the same letter.

Any advice on what to do here? Is what I have told by the IRS accurate?

 

[FlyingRon]

You seem to understand the issues correctly, and the IRS answer is indeed what will happen. You're not entitled to any preemptive strike about people cheating on their taxes.

What will happen is the letter will come. It will ask for either justification that the exemption is properly taken or that you refile the return without the exemption. They even kindly insert an 1040X with the letter so the affected party can do so.

All dad can do is make sure he has his documentation ready so he can promptly respond when the letter comes (though they have a very long response time, if I recall properly).

 

[LdiJ]

You seem to understand the issues correctly, and the IRS answer is indeed what will happen. You're not entitled to any preemptive strike about people cheating on their taxes.

What will happen is the letter will come. It will ask for either justification that the exemption is properly taken or that you refile the return without the exemption. They even kindly insert an 1040X with the letter so the affected party can do so.

All dad can do is make sure he has his documentation ready so he can promptly respond when the letter comes (though they have a very long response time, if I recall properly).

I agree. What has been explained is exactly what will happen and you do seem to understand the issues correctly.

However, I will add some practical advice that seems to be missing. Whoever files first will be the only party that can file electronically. The party that files second will have to file a paper return and will have to wait 4-6 weeks for their refund. Both parties will get their refunds and it will be sometime late in 2010 before the IRS will send out the first letters.

It may be well into 2011 before the IRS asks one or both parties to provide proof that they were the correct parties to claim the children for 2009.

The necessary proof required will be outside evidence of where the children resided. That generally means school and medical records reflecting that the children resided with a specific parent. Since those records can change over time, its important to gather that evidence now, so that you have it available to provide when the time comes.

 

[artbuc]

I agree. What has been explained is exactly what will happen and you do seem to understand the issues correctly.

However, I will add some practical advice that seems to be missing. Whoever files first will be the only party that can file electronically. The party that files second will have to file a paper return and will have to wait 4-6 weeks for their refund. Both parties will get their refunds and it will be sometime late in 2010 before the IRS will send out the first letters.

It may be well into 2011 before the IRS asks one or both parties to provide proof that they were the correct parties to claim the children for 2009.

The necessary proof required will be outside evidence of where the children resided. That generally means school and medical records reflecting that the children resided with a specific parent. Since those records can change over time, its important to gather that evidence now, so that you have it available to provide when the time comes.

Thanks. A couple questions:

1. Father will not know if he is filing first or second so how will he know if he can file electronically? If he files electronically and it turns out ex filed first, will IRS reject his electronic filing?

2. Re proof, Father has two letters (separate one for each child) from ex stating her approval that child will live with Father. Also, Father has Family Court order revoking his child support order based on fact that both children now reside with him. On the child that moved Jan 9, 2009, Father has school records. On the child that moved June 19, 2009, Father does not have any school records because, of course, it was summer time. Current school records would only show that the "June 19" child was living with Father when school started in September. Father has always provided dental/medical insurance so these records don't help. Will the Family Court order and letters from ex be adequte proof?

Thanks.

 

[FlyingRon]

He doesn't need to know if he's first or not (though it behooves him to be the first to try). This is one of a number of reasons why electronic filing fails. When it does you print out, sign, and mail off the returns. For several years my returns could not be electronically filed (never did figure out why) the computer just rejected them.

It looks like he has decent enough records. The court order plus some evidence such as he has to show it was indeed complied with is enough.