What qualifies as dependent fraud on a tax return?

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Question:

What qualifies as dependent fraud on a tax return?

Answer:

Tax dependent fraud is one of the largest abuses of the system. The IRS keeps an eye out for those who are abusing the system by claiming dependents who aren't theirs to legally claim. A large reason for claiming fraudulent dependents comes from those who seek to get more money from the Earned Income Credit.

Examples of Dependent Fraud

There are a few ways people use dependents to defraud the system. The most common ones involve divorce and non-existent nieces and nephews.

  • Divorce fraud. Custodial parents are the ones who are supposed to get the deduction for any dependents they may have. However, the IRS has no way of knowing who has the children unless they've been notified. And even then, people slip through the cracks. What happens is that the non-custodial parent gets their return in before the custodial parent does. The non-custodial parent has access to his or her child's Social Security number and enters the child onto his or her return. The custodial parent will most likely see their return rejected because of what the non-custodial parent did.
  • Nieces and nephews are another problem area. Many aunts or uncles will claim they took care of their relations when they never did. And as with the non-custodial parent, the parent of the children will get his or her claim rejected under the same circumstances.

Get a Lawyer

If there's concern about dependent fraud with a relation, it's time to hire a lawyer. They can stop the person, allowing the rightful custodian to obtain what is his or hers by law.

 

References:

LA-NOLO4:DRU.1.6.2.20140813.27175