How to respond to a letter from the IRS
The answer actually depends on the type of letter from the Internal Revenue Service. Every year the IRS sends millions of letters and notices. This is the way the agency contacts taxpayers, not by calling them out of the blue and threatening to put them under arrest or by sending them mails. Those are scams. If more than one person claims the same dependent on the tax return, both individuals can certainly receive a letter from the IRS. The IRS letter can request the taxpayer to review the return and file a rectification if the taxpayer had no right to claim the dependent. With this type of letter, the IRS does not need the taxpayer to do anything if the taxpayer is absolutely certain they have claimed the child correctly.
Another letter the taxpayer may receive shows that the IRS is auditing the return. If this letter is issued, the taxpayer must gather evidence to show their right to the dependency exemption and / or the child tax credits. It is very essential for the taxpayer to read and comprehend what sorts of evidence the IRS wants, keep a copy of everything sent to the IRS and respond within the deadlines or ask for more time. The IRS may withhold all or part of the taxpayer’s refund.
Cases when the IRS disapproves or reviews the statements that a dependent claims
Parents with custody of a child may ask for a printed version of the statement. The parent must sign, date, and send it to the IRS. It may be a good idea to contact the other parent if there is reason to think that the other parent has claimed the child and is confused about who is supposed to allege it or whether the non-custodial parent has the right to claim the child at all.
If this problem has happened more than once, the parent at liberty to claim the child may be interested in filing the return as soon as they have all the tax information for the year. The first return filed is more likely to be filed and processed electronically without mistakes.
Non-custodial parents who have signed a permission slip may mail a signed and dated copy of the statement with a copy of the permission slip attached.
Parents that do not have custody and without a permit that meets IRS standards are likely to be denied the dependency exemption and the child tax credit. They will have to try to resolve the situation with the custodial parent. If the other parent does not cooperate and there is a court order, it may be necessary to go back to court to enforce the order.
A parent who claims a child without being legally entitled to the exemption or credit risks having problems with the IRS. Additional taxes, interest and penalties can make the claim a costly and unnecessary mistake and a headache for everyone.
If you suspect that a stranger has stolen your child’s information, you can contact the IRS. Ask what options are available to try to avert the stranger from using your child’s ID. You can file a report with the local police department. Keep a copy of any complaints or forms that you are asked to file. You can also ask for your child’s credit record regularly to make sure that no one is using your child’s Social Security number for other purposes.
Divorce exemption, separated, or never married
In a situation where the parents are divorced, separated, or never married, the custodial parent may waive the dependency exemption for the non-custodial parent. The non-custodial parent can claim the dependency exemption and if qualified, the child tax credit. The custodial parent can claim the EITC and the dependent child care credit if the parent meets the requirements even if the custodial parent assigns the dependency exemption to the non-custodial parent. The simplest way to waive the dependency exemption is to use IRS form 8332.
What if more than one person provides support and wants to claim an exemption?
Sometimes a child qualifies for more than one person. Often more than one taxpayer provides support for a qualified relative. If more than one person has the same qualifying child or qualifying relative, people can agree on who is going to claim the qualifying child or qualifying relative. The discussion of who can / should claim a dependent when both taxpayers can legally claim the dependent is good tax planning.
It is not good to “lend or borrow” dependents to other taxpayers. Some bad taxpayers encourage this act. A neighbor or child of a friend who does not live with the taxpayer all year and who the taxpayer does not support cannot be a dependent. If a preparer gives you advice on something like this, the taxpayer should go out and consider reporting the preparer to the IRS.