What to Do If You're Claimed Wrongly as a Dependent on Someone Else's Tax Return
Being claimed as a dependent on someone else’s tax return or claiming a dependent on your tax return can have a direct impact on the amount of your tax refund or the amount you owe.
In 2020, it also could have impacted the amount of your stimulus check in certain cases.
For these reasons, it’s not hard to imagine why someone claimed a dependent incorrectly that they’re not supposed to, including yourself.
Two tax returns can’t both claim the same dependent even if they have different filing statuses.
If you aren’t a dependent and someone else is improperly claiming you as one on their tax return, that person could get in financial trouble with the Internal Revenue Service (IRS).
The same goes for someone incorrectly claiming one of your dependents on their tax return.
Here’s more about what happens when a person claims a dependent incorrectly and how to fix it.
How Others May Incorrectly Claim You or Your Dependent
The reality is:
The act of claiming a dependent on a tax return isn’t difficult.
All you have to do is input their name, Social Security Number and relationship to you on page one of Form 1040.
The first person to file a dependent, or themselves, usually goes through the system without a problem.
While we all try to protect our Social Security Numbers, data breaches happen. Sometimes, that information falls in the wrong hands. Then, someone could claim you or your dependent as their own on their tax return. This could be identity theft.
Fraud
Identity thieves may try to use you or your dependent’s information to boost a fraudulent refund.
In some cases, they could check the child tax credit box for a quick way to get more money back.
Parents filing jointly that aren’t willing to let go of the tax benefits of their children may improperly claim a child that is technically independent according to the criteria of claiming a dependent.
Forgetfulness
Not all incorrect dependent claims are intentional, though.
If you’re a teenager or recent college grad, parents may have forgotten to remove your information from their return when you became independent for tax purposes.
Divorced parents may have forgotten it is their ex-spouse’s year to claim their kid. Thankfully, there is a process to correctly sort out who should claim a dependent.
What Are The Requirements to Claim a Dependent?
In order to claim dependents, you (and your spouse, if filing jointly), can’t be eligible to be claimed as a dependent by someone else.
Dependents must be:
- U.S. citizens
- U.S. resident aliens
- U.S. nationals
- a resident of Canada or Mexico
Technically, a dependent is one of two types of people. A dependent is either a qualifying child or a qualifying relative.
You can’t claim a dependent unless they fit one of these two categories. If you fit either of these categories, then you cannot claim that you are independent and claim yourself. Instead, the qualifying person gets to claim you as a dependent.
If you do not meet these definitions, then your parents cannot claim you as a dependent. If they did, keep reading to see how to claim yourself.
A dependent as a qualifying child
To be a qualifying child, the person must pass five tests.
First, they must be related to you in one of the following ways. The child must be your:
- Son
- Daughter
- Stepchild
- Foster child
- Brother
- Sister
- Half-brother
- Half-sister
- Stepbrother
- Stepsister
- A descendant of any of the above
Second, a child must be under age 19 at the end of the year and younger than you. Permanently and totally disabled children can be any age.
Third, the child must have lived with you for more than half of the year, with certain exceptions.
Fourth, the child cannot have provided more than half of their own support during the tax year in question.
Finally, the child must not file a joint return for the year, except in rare circumstances.
A dependent as a qualifying relative
A qualifying relative is another type of dependent you may claim. To claim a qualifying relative, the relative must pass a four-part test.
First, the person can’t be your qualifying child or the qualifying child of any other taxpayer.
Next, they must either live with you all year as a member of your household without violating local law. Alternatively, you can pass this test if the relative is related to you in one of the following ways:
- Child
- Stepchild
- Foster child
- Descendant of any of the above
- Brother
- Sister
- Half-brother
- Half-sister
- Stepbrother
- Stepsister
- Father
- Mother
- Grandparent
- Other direct ancestor (but not foster parent)
- Stepfather
- Stepmother
- Son or daughter of your brother or sister
- Son or daughter of your half-brother or half-sister
- A brother or sister of your father or mother
- Son-in-law
- Daughter-in-law
- Father-in-law
- Mother-in-law
- Brother-in-law
- Sister-in-law
These relationships still count if they were created by marriage even if your spouse dies or you get divorced.
Third, the person’s gross income must be less than $4,200 for the year.
Finally, you have to provide at least half of the person’s total support for the year.
Special rules
As you can imagine, there are many special rules and further definitions that must be explored when determining if a person is a qualifying child or relative.
The details are complex. For instance, there are special rules for a qualifying child of more than one person. You can read more about them here.
Another example is that full-time students up to age 24 may qualify to be a dependent of their parents in certain circumstances.
Read IRS Publication 501 for the complete details about claiming dependents and all of the special rules.
What Happens If You Claim Yourself or the Dependent, Too?
You may not know that you or your dependent has already been claimed. If this is the case, you’ll likely find out when you file your income tax return.
You’ll receive an error stating your or your dependent has been claimed on either their own tax return or someone else’s if you e-file your return. If you paper file, you’ll get a mailed notice from the IRS.
You won’t be able to e-file your tax return when this error occurs. You’ll have to file a paper return.
If you already know someone else has incorrectly claimed you or your dependent, you don’t have to try to e-file your return. Instead, skip straight to filing a paper return to get the dispute process started.
How to Fix the Situation and Correctly Claim Yourself or Your Dependent
If you know who improperly claimed you or your dependent, you can ask them to file an amended return to fix the problem.
This process takes time, though. You’ll still likely need to paper file your tax return to get it in on time.
In other cases, you may not know who incorrectly claimed you or your dependent. Identity thieves won’t send you a thank you card.
When this happens, you’ll need to file your paper tax return properly claiming yourself or your dependents.
Once the IRS processes your return, usually about two months later, they’ll contact you and whoever else claimed you or your dependent by letter.
The IRS will then start the process of figuring out who is correctly claiming yourself or the dependent. They do this by asking both parties to amend their returns or do nothing.
Now:
If neither party amends their return and takes the double-claimed dependent off, the IRS may audit both taxpayers to determine who should really claim yourself or the dependent.
When you’re audited, you’ll have to provide documentation showing why you’re entitled to claim yourself or your dependent. The other person will have to do the same.
After the IRS examines the information all parties submit, they’ll determine who gets to claim you or your dependent. They’ll also assess any penalties or other taxes that are due from the person that should not have claimed you or your dependent.
Unfortunately, this is not a fast process.
It can tie up your tax refund until it is resolved, too.
Prevent This Headache by Taking These Steps
Since dealing with more than one person claiming either you or your dependent is a nightmare, it makes sense to try to avoid this.
First, don’t give out your own or your dependents’ Social Security Numbers if at all possible. Many places may ask for this information on intake forms, such as doctors’ offices.
The information is rarely necessary but can be useful if a provider needs to send your bill to collections. Refuse to give out the information whenever possible so there is one less way the data can be exposed in a data breach.
If you know you’re going to have conflict about claiming yourself or a dependent, look up the rules.
Based on the rules for claiming a dependent, explain your stance to the other person before you both file your tax returns.
Try to sort out who should rightfully claim you or your dependent to avoid a lengthy dispute with the IRS.
In some cases, it may make sense to have an agreement about when each person will claim a dependent.
If you’re the person in question, talk with your parents to see what makes the most sense for everyone as long as you’re following the IRS’s rules.
When parents get divorced, they may alternate which parent gets to claim the dependent each year if they both qualify according to the IRS’s rules.
In this case, get the agreement in writing. If the other parent is forgetful, remind them who gets to claim the dependent this year before they file their tax return.
Get Professional Help
If you’re frazzled by dealing with the IRS or you don’t want to deal with the headache yourself, consider hiring a tax professional to help.
Certified Public Accountants may be able to help you deal with the IRS to properly claim yourself or your dependent.
While they won’t likely be able to speed up the process, they can make sure you provide the correct documentation to win the dispute.
