IRS didnt pay close attention, and now they want the money back?

Question

Ok, so in 2005 I did my moms taxes on turbo tax, but my step-dad did his taxes on paper. Somehow one of there kids got claimed for child tax credit on both. The IRS issued the refund as stated on the return, but now they are telling my mother that she owes the money plus fees. Shouldn't they be responsible for giving the refund.

they are still together but not married. After reading the information, there reasoning for my mom being punished is that my step-dad made more money and was entitled to the tax credit. Thank You

Answer 1

Actually it doesn't matter that your step-dad did his tax return on paper. Had he efiled, his tax return would have bounced (duplicate SSN), but if he called the IRS and asserted that he had the right to claim the child, he would have been told to file on paper and it would be straightened out later.

The true question is who had the RIGHT to claim that child on their tax return?

Are they still married? Were these MFS returns or something else? If they are divorced, what does the divorce decree say? It's common for the divorce papers to say that the dad can claim one child and if she signed off on those papers, she should have known she couldn't claim that child. (It sounds like your stepdad supplied the paperwork showing he was right.)

While the US tax system is voluntary, it's still a requirement that you do them right and if there is a mistake, you pay the excess refund back. (With penalties and interest!) After all, she did get the money and it was more than what someone who hadn't made a mistake got.

The IRS doesn't care that it was an honest mistake.

(By the way, higher income *is* the tie-breaker between parents if both try to claim the exemption.)

Answer 2

Both parents claimed the same dependent child on their tax returns. From your information, they were both qualified to claim the child. However the child can be claimed on only one tax return.

So this is what happens: When there is a conflict as to who claims the child, the parent with the higher AGI is given the exemption by the IRS. In this case, your mother's exemption is disallowed and she has to pay back the refund that was given to her based on the exemption.

As far as the IRS being at fault, here's the deal: The IRS has two years to assess additional taxes owed on a tax return. The letters assessing additional taxes for the 2005 tax returns are going out now. Taxpayers who received refunds that are later disallowed have to pay back those refunds plus interest and sometimes penalties.

Your example illustrates why I never do tax returns for friends or family. Your mother and stepdad should have been clear between them which children were on which return, and you got caught in the middle.

Answer 3

Uh, no. If they held up refunds until everything was totally checked out, people would be screaming. So they do some very basic checks that they can do quickly, then issue the refunds. It often takes as much as a year or two before all returns are thoroughly reviewed, and notices issued of problems found.

One of your parents got money they weren't entitled to. Apparently the IRS has reviewed both returns and determined that your step-dad was the one who should have had the money, so your mom has to pay back what she got that she wasn't entitled to.

Answer 4

No... The taxpayer is responsible for the accuracy of the tax return. If the IRS finds out that the prior refund was issued due to an error, they can assess the taxpayer for the prior, plus penalty and interest.

Answer 5

When you completed the tax return you must not have given consideration to the legal requirements for claiming the credits in question. The IRS assumed that your mother's return was prepared accurately and honestly. With the conflicting information the IRS was required to judge the qualifications of the competing claims and it appears that your mother's claim did not measure up.

Answer 6

seems like your mom's tax was files online and and step dad files paper return. If your step dad had files efile, it might have bounced back same time. It went through as he filed paper return and paper return has different processing.
But you can not use duplicate SSN sooner or later IRS's system catches it, so one of them have to give up.

Answer 7

i'm sorry, what grew to become into the question? :) No fairly, site visitors injuries are a sturdy occasion. fairly undesirable ones. Our minds record each and every thing, yet we'd desire to clear out stuff purely to maintain on goin' popular. yet those moments whilst the adrenaline bursts, we are in a position to take hours to define what exceeded off in those 5 seconds of severe trauma. it relatively is the desirable occasion i'm able to arise with.

Answer 8

Of course all this will be moot when the FairTax Act H.R. 25 passes and replaces all income taxes with a single sales tax on new items. The FairTax now has the support of hundreds of thousands, 72 congressional sponsors / co-sponsors, and 7 presidential candidates. See www fairtax org