A young friend asked my help with her taxes where we found her adult son has claimed her two young sons as dependents, filed for and received EIC and a bigger refund, and left her broke and without a car (stolen, likely a coincidence). The older boy resided with her nearly 8 months, the youngster all year. Recovering her taxes is #1 "food on the table" priority, jailing the prodigal is just a bonus. My question is, how does she report this without handicapping her refund process? Is there a way to get her some relief as the matter is investigated?
Asked
Active
Viewed 3,355 times
1 Answers
31
Is there a way to get her some relief as the matter is investigated?
The IRS has a pretty detailed instructions page for this scenario as it is not uncommon (although usually between separated spouses).
The mother will need to file a return as usual, claiming all she is entitled to claim. The IRS will then contact her (and probably the adult son) requesting documentation to substantiate the claim. If the mother can prove the facts she will receive the credit she's entitled to, but it will take a long time during which the adult son will keep the money he got.
However, once the IRS resolves the claims in the mother's favor, they'll ask the adult son for the money back with penalties. Civil penalties can range between 20% and 75% of the fraudulently obtained tax refund. Criminal penalties include prison time (26 USC 7206 defines this as a felony with prison sentence of up to 3 years), but the IRS may not necessarily pursue criminal charges.
littleadv
- 190,863
- 15
- 314
- 526