What Happens When Both Parents Claim a Child on a Tax Return?
Ultimately only one person can claim a dependent on a tax return, regardless of the situation between the parents. How you file your taxes, whether you are married or divorced, and who earns more (or less) should all be factored into the decision of which parent will claim a child. Parents who fail to communicate adequately before filing taxes will typically find the second person who files will be audited, if not the first parent as well. To be safe, take steps to prevent the audit that will invariably result if both parents claim a child on a tax return.
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Before Filing
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Typically, tax credit is awarded to the parent with sole custody of the child. In cases of joint custody, however, this can be a tricky situation. Both parents deserve the benefits of the tax credit, but only one can claim it. In such a situation, it might be best for the parent earning less or who is eligible for the earned income credit to make the claim and agree to settle with the other parent for some amount of the credit. Some divorced couples agree to take turns claiming the child on their tax returns.
When Filing
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Once it is confirmed which parent should claim, be clear to communicate when you have filed your taxes. This is not the time to decide to pull a fast one on your ex-spouse, as it can trigger an audit if both of you manage to file before the IRS sees the first claim. If you are worried about an audit, some tax services like Turbotax and HR Block offer audit defense protections on your return to help you navigate the audit process.
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If You Catch the Error Before the IRS
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If you learn that your ex has claimed your child first and did so illegally, you can take him to court to have the judge order him to make amends. If you do not have this matter spelled out in your divorce agreement, you may contact the Internal Revenue Service, which will launch its own investigation.
When the IRS Catches You: Electronic Filing
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If you file your taxes online and receive an Error 0507--"Dependent's SSN ... was used for the same purpose"--don't panic. Contact a tax professional and your lawyer to proceed from this point if you feel you were entitled to claim the child.
IRS Audits
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The risk of being audited is low, but the biggest trigger for an avoidable audit is a duplicate claim of any type of credit. The whole audit process can take up to three years, and if the IRS believes fraud to be the reason they decide to take action, it can happen at any time. They can send you a letter, send out an agent, or make you come into the office. Normally the IRS will send you a letter letting you know how much more you owe (in this case, you don't get the credit). If you should have been the one to make the claim, just document any and all expenses relating to this and take your ex to court.
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References
- Photo Credit tax forms image by Chad McDermott from Fotolia.com
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Comments
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someone please help. my fiance has paper saying that him and his ex take turn. he get odd years and she get even. well she claimed her as a dependent but did not get the 1000 tax credit. so now she wants him the file her as a non dependent and claim the 1000 credit. but that's not taking turns.
