seeing lots of tax questions how about this one

[Kboeds]

DH and his ex divorced in 1999. DH was the sole bread-winner in the household. Ex fosters and adopts kids to make money. At last count she has 8 or 9 kids in the house.

At the time of the divorce DH and Ex had 4 minor children that he pays support on. In 2001 DH ask Ex who doesn't file because she has no taxable income if she would sign the 8332 form and allow him to claim the 4 minor children. DH told Ex that he would split the refund with her.

Ex refused to sign the form and told DH that she had somthing else figured out about taxes.

We had been told by some that we should go ahead and claim the kids because the worse that could happen is if she does claim them, we would have to pay back what we got. However, if she doesn't claim them because she doesn't file then no one would be the wiser.

DH is worried about doing that and will only claim the kids if she signs the 8332 or if the court order is changed. (Yet he wont take her to court for anything either) So to our knowledge no-one has claimed the exemptions for his children since 1998 tax year.

Now, we do suspect that when OSS turned 16 and went to work, BM has had him claim the kids on his taxes. I don't know how we could find out if she has someone else claiming them illegally.

Any thoughts or suggestions?

KB

[lucky]

I know when I did my taxes, the program I use "noticed" that we had a child over the age of 14 and asked if we wanted to claim their income on our return.  

I'm not sure how that works because she has no income, but could his ex be filing under her own name and claiming the 16 yo income under herself, thus getting the EIC and everything?

This appears to be a tax accountant question.

[em]Lucky

Lead your life so you wouldn't be ashamed to sell the family parrot to the town gossip.
- Will Rogers[em]

[Ref]

Let me start by telling you that I am a public accountant, however, I deal with audit 90% of the time and tax only about 10%. I have more knowledge than the average taxpayer, but am far from being an expert.

I understand that you technically can not claim the child over the BM because you have no written declaration. If BM claims, you are screwed. You have a good chance of getting away with it if her son is trying to claim. The reason being, the written declaration is simply a form that states that SHE wont claim the child. If she is not claiming, there is not argument.

If you are duking it out with her son, you will win. See the quote I put from the IRS below. Parents take priority ALWAYS. If it is between parents, custodial wins. If it is between noncustodial Parent and other family member,  Parent wins.

This is my opinion, but I feel very confident in it. Also, I have been dealing with the IRS regularly for 5 years now. They will not get you in trouble if you make a mistake. They will simply bill you for the difference. If I were you, I would claim the kids, put the money that you get into a savings account for about 6 months and see what happens.

My money is on you being able to keep every penny.

Good Luck
Ref








"Table 6. When More Than One Person Files a Return Claiming the Same Qualifying Child (Tie-Breaker Rule)

Caution. If a child is treated as the qualifying child of the noncustodial parent under the rules for children of divorced or separated parents, see Applying this special test to divorced or separated parents.

IF more than one person files a return claiming the same qualifying child and . . .   THEN the child will be treated as the qualifying child of the. . .

only one of the persons is the child's parent,    parent.  

two of the persons are parents of the child and they do not file a joint return together,    parent with whom the child lived for the longer period of time during the year.    

two of the persons are parents of the child, they do not file a joint return together, and the child lived with each parent the same amount of time during the year,    parent with the highest adjusted gross income (AGI).  
none of the persons are the child's parent,    person with the highest AGI."  

[Kboeds]

OMG!! I just read your post and printed the forms and looked up the tax table online. Ran through the 1040 real quick and DH and I would get over 10,000.00 back if we claimed his kids.

The reason it is so high is because we claim Married no dependants at the higher single rate on our payroll. So we have paid a lot of taxes.

I have told DH before we should try it and see what happens. DH doesn't want to get mixed up in a big fight with the ex over it. I told him, unless she has someone claiming them illegally, she would never know.

I already did my taxes for this year. If we filed an Amended return and suddenly changed it from 2 dependants to 5 wouldn't that raise a red flag?

I have told DH when the time comes that he is willing to get it changed in court, I want it to state that we get the right to claim the kids for the previous 3 years too. That way, once we have it on paper, we can go back and amend the past 3 years.

So what do you think Ref, should we try to amend our 2005 return? Or is it too risky and not worth getting audited over?

Thanks for your insight.

KB

[Ref]

It was pretty much as I had expected. The agent says that based on the criteria - Husband being divorced non-custodial with no 8332 he does NOT qualify to use them as a dependents. If the battle was not to do with custodial vs non-custodial and just parent vs child (sibling who you think will claim him, he would win this round.  It is not, so technically, you can not claim him.

If you had not already filed, I would say that I would roll the dice, like I said before. Amending it might not be a great idea.

Maybe the best move is to use the loss of $10k to show your husband that he is being silly not to get it in writing. My GOD $10k!!! You could even pomise to put that in a bond for the kid's college ANYTHING but to waste it.


Sorry to deflate your excitement on this. Does your ex have a lawyer you can talk to about this?

Best Wishes

Ref

[patton]

My situation is possibly a little different, as mother never worked so she had no income to claim, but she lived with her mother who supported her and her brother and my son part of the time.

I kept meticulous records every year.  I kept EVERY receipt where I bought anything, food clothing, shelter, utilities.  And I mean everything.

The first year I claimed son mother and I had joint custody with her as primary, but he was with me more than 1/2 the year.  Again I kept records.  And then the grandmother claimed him on her taxes and I claimed him on mine.  The IRS sent me a letter and they are very specific about what they will ask you for.  They are not so concerned with who has primary custody as they are who has physical custody for more than 50% of the year.  The IRS will ask you for the following information (my CPA said don't send anything except what they ask for a a brief cover letter) copy of mortgage/rent pmts, if you are furnished a place to live, then a copy of fair rental value from a realtor in that area on their letterhead., copy of utilitiy bills, letter from school/daycare/or letter from pastor.  This was before son was in school, and I always took son to Sunday School, so I had attendance records and a letter from the pastor which showed son attended more than 50% of the year. Doctor/hospital bills, all receipts showing anything you purchased directly for child including weekly grocery bills.

Anyway I got the refund that year about 4-6 months after I filed.  I don't know what they did about grandma's refund but I assume she had to pay it back.

The next year I was awarded custody in July, but I had also had physical custody of him a lot that year also even though mom was primary.  Grandma again tried to claim him, and I did also.  The IRS has not asked me for one shred of evidence as of this writing, but I have all the stuff in a folder, including letters and everything incase they they do go back and ask for it.    Again I waited about 2 months before I got the refund.

I know the IRS laws change, but the IRS is more concerned with who actually has physical custody and supports the child and CAN PROVE it!

A parent will "beat out" a non parent anytime.

[Ref]

The IRS definition of custodial parent is only concerned with the amount of time the child is with you.

"The custodial parent is the parent with whom the child lived for the greater part of the year. The other parent is the noncustodial parent. "

If you have evidence to support the amount of time, go for it. I don't think this is the case in your situation though.

Best Wishes,

Ref