What if Someone Else Claimed Your Child as a Dependent?

Make sure you know how to file your taxes properly to make sure you are the only one who can claim your child for tax purposes. Getty Images

An all-too-frequent situation at tax time: you go to file your taxes electronically, and the IRS rejects your tax return because someone else has already claimed your dependent.

Who did it?

You cannot find out who claimed the dependent: the IRS won't tell you because the IRS is prohibited by Section 6103 of the Internal Revenue Code from disclosing information relating to a tax return to anyone except the taxpayer himself or herself.

You might have a good idea of who might have claimed your dependent, however. The culprit would need to know the dependent's name, Social Security number, and date of birth. However, it isn't always an ex-spouse who claims the kids. Sometimes, parents cannot figure out who claimed the dependents. Sometimes, it can be a case of identity theft. A thief might have stolen your child's Social Security number and is now using that to steal money from the U.S. Treasury.

What to Do?

First thing: review the criteria for claiming a dependent.

Dependents come in two varieties. One variety is qualifying children. Qualifying children include sons and daughters and grandchildren under age 19 and live at home, or they are under age 24 and still in school. The second variety is qualifying relatives. Qualifying relatives are people who don't meet the qualifying children criteria but who earn very little money.

The rules are pretty straightforward. The IRS lays out all the details in their Publication 501, Exemptions, Standard Deduction, and Filing Information. Similar information can be found in chapter 3 of Publication 17, which covers Personal Exemptions and Dependents.

The reason I want you to start by reviewing your eligibility for the dependent is to make sure we are starting off on the right foot.

If you realize you aren't eligible to claim the dependent, then you've realized your mistake and you can file your tax return properly.

If you are eligible to claim the dependent, then you'll be ready to take the next step with confidence.

The next step is to print out your tax return (with the correct dependents on them), and file the return with the IRS. You need to mail the return to the IRS for manual processing. This tax return cannot be filed electronically because the IRS's computers are programmed to screen out multiple claims for dependents. "Unfortunately, some returns cannot be e-filed," says Kris Siolka, an enrolled agent from the National Association of Tax Professionals, "This is one of those cases. When two taxpayers claim the same dependent, the IRS will require that each taxpayer provides proof as to their right to claim the dependent. This takes time to sort out. Meanwhile, file your return claiming the dependents you are entitled to and if the return is rejected, file it by mail."

The third step: be prepared for an audit over the dependents. The IRS will audit both your tax return and the return of the other person who claimed the dependent. The IRS will ask questions and seek documentation based on the eligibility criteria and the tie-breaker tests.

To prepare for the eventual audit, you should gather any and all records indicating that the dependent lived with you, such as school and medical records. Having these records will go a long way towards winning the audit and protecting your refund. You can read more about how the audit process is conducted and your rights to appeal a decision in Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund. You should be aware of all your rights as a taxpayer, including your right to seek assistance from the Taxpayer Advocate Service. You may be eligible to receive free or low-cost representation from publicly-funded tax clinics.