I was recently sent a revision to my 2005-06 my income tax due to my living situation?

Question

I had a baby four years ago with my boyfriend at the time, I lived on my own for the first two years of my daughters life. At the end of 2005 her father and I decided to move in together. We do not consider ourselves common law as we do not share a bedroom and all of our finances are kept seperate. Her father runs his own business and I work for a company and I claim her as my dependent always have. Part of our re-assessment states that because he makes less money than me (his company makes much more money than I do he only shows as paying himself less) he must claim her as a dependent and they have sent me a 6,000.00 bill after re-assessment of my personal taxes. I don't understand!!! I pay for everything that has to do with her and he pays for the house this is merely a living arrangement for financial purpose and has nothing to do with us being a couple. Where can I go to have someone assist me in rectifying this assessment

Answer 1

Hi Tracy

Something does not add up. If you and he are not on a joint return, IRS will reveal NOTHING to you on a letter they initiated.

Furthermore, it sounds like you both claimed the child for each year, 2005 & 2006. If this is the case, IRS would have sent each of you a letter giving you a chance to come clean. If you now got this letter because you both claimed the same child you must both have not responded to the first one.

For 2005, if he moved in a the end of the year, you had custody more than half of the year so daughter is your qualifying child for every kid related tax benefit. So, IRS is wrong on this. To prove it, you will need to prove: A; that child lived with you... letter from Dr., school or child care provider with your address as child's home, and copy of lease or statemetn form landlord that boyfriend did not live with you until....

The bad news is that they will eventually restore your tax return and revise boyfriend's.

2006 is even more confusing. You say he has his own business, which you do not say what type of entity it is. I am guessing that it is a C-Corp, but if not then you really need more help than you can get here. ( If he is a sole proprietor, it is not how much draw he takes but the profit of the business that counts as income, so if theis is the case he might have a higher income than you.)

Let's assume that the facts are as stated: he makes less than you. As I mentioned, IRS would not disclose that to you. Also, the tiebreaker rules for a qualifying child of 2 people would test first: with which parent did the child live longer during the year; and second: which parent had the HIGHER income. Again, YOU have the right to claim your child as your qualifying child.

It seems pretty clear to me that unless father is really dumb he had to know that you were claiming your child and at the very least should have had a discussion with you before claiming the child. So in my mind his mtives are suspect. If you agree, move forward on this without him. If not, involve him.

One is always at risk of "bending over & spreading" when you ask IRS to sort this out. You can try to get advice and follow it if it makes sense. If not I strongly urge you to see a tax professional. With $6000 at stake it's a no brainer. Contact your state or local Enrolled Agent Society or look in the local yellow pages for tax pros with EA after the name. You will get the best value for your money.

Good luck!

Answer 2

This makes no sense whatsover. Did he claim her on his return also? If you both claimed her, then the IRS has a set of rules as to which of you gets the exemption for her if you can't agree between yourselves - the parent with the HIGHER adjusted gross income would get the exemption if you both lived with her the same amount of time. If he didn't claim her also, then there shouldn't have been any problem on your return.

What I'm guessing is that he claimed her also on his return for the year, and that you BOTH got letters. Unless his business is incorporated, the business net income would be taxable to him, which might take his income higher than yours and therefore have him entitled to the exemption. IRS rules don't really involve who pays for what bills. And anyway, if he's paying for the house, that's a big chunk of your daughter's support.

If this is the first letter you received on the issue, or if he didn't claim her also, then something is very wrong with the things shown in your question.

Given the large amount of money involved, you'd be wise to make an appointment RIGHT AWAY with a CPA or Enrolled Agent (NOT H&R Block), show them the letter and a copy of your tax return and of any other letter you've gotten from the IRS, and let them advise you - there is too much in your question that doesn't make sense for anyone here to give you sensible advice. Be sure to respond to the IRS letter in the time they give you on the letter.

And a side note - even if you shared a bedroom and kept your finances together, you could not necessarily be considered as common law married - only a few states still even have common law marriage, and they all have requirements that go way beyond just living together.

Answer 3

Not exactly sure what you were sent but I KNOW that the federal government does NOT do your taxes for you....what they sent you was an ESTIMATE but what must have happened here is that your BOYFRIEND must have filed and put YOUR social security number on HIS return and claimed his daughter on HIS return---that is one of thethe ONLY ways a flag would be generated because 2 returns claim the same child.... you MUST call the IRS and explain the situation to them---exactly as you told us here.... You are NOT MARRIED, you hopefully filed as SINGLE with one dependent (your daughter) tell the IRS that YOUR income tax return was CORRECT AS FILED. they may tell you what PROOF you have to show that you can claim your daughter... but do it NOW.... don't wait---you can get the IRS by calling --1-800-829-1040.. (the general IRS #, and then follow the prompts)... this time of year you SHOULD be able to connect to an actual IRS representative. Thing is, you MAY also get a notice from the STATE where you live regarding your STATE taxes as well because when the IRS changes information they INFORM the state where you live. What the IRS SHOULD do is ask for PROOF from the boyfriend that he has the right to file HIS return the way HE has... and MAY investigate the entire matter after your phone call.. I'd ditch the boyfriend if he filed false documents with the IRS just to get more money for HIMSELF.... He MAY have also been the first one to FILE last years taxes and if HE claimed your daughter and said you were married, THAT would be the other reason you are getting the bill... (because he claimed her first this year).... if he tells you anything different.... he's not being truthful.... I worked in the INCOME TAX DEPARTMENT of a STATE TAX DEPARTMENT for 35 YEARS and I KNOW that the information on BOTH returns MUST MATCH so please for yourself and your daughter get this straightened out before the boyfriend screws you on THIS YEARS TAXES.

Answer 4

Since you are not married but live in the same household only one of you can claim the child. It apprears that you both tried to claim her and your claim was disallowed.

Call the number on the letter if you thing this was in error.

Answer 5

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Answer 6

The house is something "that has to do with her". She lives in the house. Providing a place for her to live is "support". With a few exceptions, only the taxpayer who provides the majority of a child's support can claim the child.

I am confused as to how you had a baby if you had separate bedrooms, etc. Conception without sleeping together is a story that should be worth more than $6000 to the tabloids.