You may find that someone has claimed your child on his taxes. The IRS knows this happens, and has clear-cut ways of determining who has the right to claim a dependent on his tax return. However, the right to claim a child on a tax return is completely independent of any family court orders that may stand. Sometimes, you don't know if someone has claimed your child on his taxes, but if he has no right to do so, the IRS will catch this error and notify you how to proceed.
Do I Need to File an Amended Return?
Because a dependent can be claimed on only one tax return per year, when two people claim the same child, this raises a red flag with Uncle Sam, as two returns are processed with the same Social Security number. Typically, this happens when a non-custodial parent or relative claims the child as a dependent, someone claims a tax credit for the child, or if the child claims an exemption for herself on her tax return.
If you're e-filing your return, and the other person claims your child first, then your e-filed return will be automatically rejected. You will then need to file a paper return claiming the dependent. This is not an amended return. Although your standard return will be processed, and any refund due will be sent as usual, you will receive a notice from the IRS notifying you that your child was claimed on someone else's return. Both you and the other person claiming your child on his taxes will receive this letter from the IRS.
The Tiebreaker Rule
This notice you receive when someone else has claimed your child on his taxes will request that either you or the other party amend the return. If you feel you can prove the right to claim the child, you can do nothing. If both parties do nothing, the IRS then will send another notice requiring each person to prove a right to claim the child.
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This proof is to meet the requirements of the tiebreaker rule and determines who can rightfully claim the child as a dependent on his taxes. Generally, the person who has the child for the majority of the year is able to claim the child. In the event both parties have the child for an equal amount of time, the person with the higher adjusted gross income, or AGI, has the right to claim the dependent on her taxes.
So, in essence, if someone claims your child on her taxes, you do not have to report her, because the IRS will definitely catch this mistake and let you know how to go about fixing things. If you feel you have the right to claim the child, providing proof that the child spends the majority of the year in your home being cared for by you, will typically suffice. With proof from both parties, the IRS will then make a determination as to who has the right to claim the child. The person who erroneously claims the child as a dependent on her taxes will incur penalties, fees and interest associated with filing an amended return.