The IRS’s statistics show that more than half a million tax returns were associated with identity theft in 2017. Thieves will commonly use someone else's Social Security number to claim a tax refund they wouldn’t otherwise be entitled to, to get a job or to fraudulently claim you or your child as a dependent for various tax benefits.
The resulting damage from this theft can be even more serious if it results in losing out on an economic impact (EIP) payment that Americans have received from the federal government in response to the global health crisis.
Rules for Dependents: Can You Be Claimed?
Some individuals are more likely than others to be fraudulently or erroneously claimed as dependents. It can help to understand the basic rules regarding who’s a dependent and who’s not to determine whether you might fall into a danger zone.
The Internal Revenue Code defines two types of dependents: qualifying children and qualifying relatives. Qualifying children must:
- Be age 18 or younger as of the last day of the tax year, or age 23 or younger if they’re full-time students
- Be younger than you, and younger than you and your spouse if you’re married and you’re filing a joint return
- Live with you for more than half the year
- Not pay for more than half their own support needs for the year
- Not file a joint return with a spouse unless it’s solely for the purpose of claiming a refund—they don’t have any tax liability
Qualifying relatives must:
- Live with you all year, but there are exceptions for some close relatives like parents
- Not have gross income for the year of $4,300 or more as of 2020
- Depend on you for more than half their total support needs for the year
The $4,300 gross income figure for qualifying relatives is tied to the personal exemption amount for the year. Exemptions themselves have been repealed through 2025 under the terms of the Tax Cuts and Jobs Act (TCJA), but the figure is nonetheless updated annually because it’s indexed for inflation and it’s still tied to qualifying for other tax breaks.
Qualifying children and qualifying relatives must be U.S. citizens, must meet either the green card test or the substantial presence test for the calendar year or be nationals or residents of Mexico or Canada.
These rules are particularly important:
- You can’t claim any dependents on your own tax return if they are claimed as a dependent by another taxpayer.
- You can’t claim any dependents on your own tax return if someone else can claim you as a dependent.
If You’ve Been Claimed as a Dependent
The IRS should let you know relatively quickly if someone has filed a tax return claiming you or your own dependent as their dependent, whether fraudulently or by mistake. You won’t be able to e-file your return if your dependent has already been claimed by someone else. You’ll receive IRS Notice CP87A by U.S. Mail if you mailed in a paper tax return. The taxpayer who claimed your dependent will also receive the notice.
When It’s an Honest Mistake
Your first response might be to reach out to your family members if this type of tax snarl happens, so you can rule out far more serious issues of tax-related identity theft. Multiple taxpayers claiming the same dependent can sometimes be the result of an honest mistake.
Maybe you and your child’s other parent aren’t married, and maybe you both thought you could claim them, so maybe you did. Or maybe you and your siblings are collectively supporting a parent who’s in an assisted living home, and more than one of you claimed them as a dependent. One particularly common scenario is when an older child, usually a college student with income, files a tax return to claim a refund and their parents claim them as well.
“The most common situation is when a parent claims a child who has already filed their own tax return without notifying their parent,” Paul Miller, managing partner of the CPA firm Miller & Company LLC, told The Balance. “A parent could have supported the child for the year while the child is in college and has a part-time job. The child is eager to get their refund.”
An alert is then triggered with the IRS because the dependent’s Social Security number appears on more than one tax return.
What Can You Do About It?
You have options and recourse if you’ve erroneously been claimed as a dependent on someone else’s tax return, but they can depend on what went wrong and why.
You can file a paper return, rightfully claiming your dependent, if the IRS rejects your e-filed return, regardless of whether this turns out to be a family problem. The agency will automatically open an investigation when it receives your return with a duplicate Social Security number.
Keep in mind that you must have proof on hand to establish that you are indeed the taxpayer who has the right to claim the dependent. You’ll probably receive IRS Notice CP75A, requesting copies of documentation to support your claim.
An amended return can be filed when claiming a dependent was just a mistake, such as with parents and their children. “All mistakes can be corrected. That’s why they make erasers,” Miller says. “Unfortunately, an amended return needs to be filed for the child, and any refund received needs to be repaid. Both these events take time. All the while, the parent either can’t file their return or has to file their return without the child and amend their own return.”
The IRS notice will include instructions as to what you should do next.
It can be a good idea to report the incident to the IRS as well as the FTC at IdentityTheft.gov if you can’t identify who might have used your or your dependent’s Social Security number. You can also call the IRS Identity Theft Protection Specialized Unit at 800-908-4490. You might also want to put a fraud alert on your credit reports.
What Happens Next?
The IRS indicates that it will begin an investigation into the matter within two months after you file a paper return if your e-filed return is rejected and two returns claim the same dependent. An audit can result if neither you nor the other taxpayer files an amended return that removes the dependent.
The IRS can’t lawfully identify the individual who attempted to claim you as a dependent because dependents aren’t considered the primary or secondary taxpayer on the tax return.
How To Request a Delayed Stimulus Check
Unfortunately, you might not realize that you’ve been fraudulently claimed as someone’s dependent until the fallout begins and the signs that your identity has been compromised start mounting. One sign might be that the IRS indicates that you won’t be receiving a 2020 stimulus payment because someone, either your parents or an identity thief, has claimed you as a dependent. Claimed dependents don’t qualify for EIPs.
Will you have to forfeit the stimulus check? Not necessarily. But your parents or any other taxpayer who claimed you must first file an amended return releasing you as their dependent or the IRS must have investigated and denied their claim.
If your parents or another person mistakenly claimed you as a dependent and they’ve filed an amended return to straighten things out, Miller said, “The stimulus payment would have to wait until the amendments flush out and the situation is corrected.”
You can file a 2020 income tax return in 2021 and claim a “recovery rebate credit,” even if your parents or another taxpayer rightfully claimed you as a dependent. You don’t have to have taxable income to file a federal return. There’s no rule that says you can’t file if you earn less than the threshold that would require you to file a return. You only need to have a Social Security number.
The IRS has indicated that it will work with the Social Security Administration to identify taxpayers who receive benefits but are not required to file tax returns.
The Bottom Line
All of this boils down to nine digits: your Social Security number. It’s even possible that a taxpayer could transpose numbers on a tax return, inadvertently entering yours instead of their dependent’s. But the problem can result in a major headache, even if the root cause isn’t tax-related identity theft.
The good news is that the IRS wants to set the record straight just as much as you do. You have a few options. Reach out to a tax professional if you feel confused. The Taxpayer Advocate Service (TAS), which works with the IRS, might be able to help you as well.