IRS dependent fraud occurs when you knowingly claim someone as a dependent on your federal income tax return who does not qualify for that designation. People commit dependent fraud to reduce their taxes, which makes it a form of tax evasion. Tax evasion is a felony with potentially severe criminal penalties. Penalties for IRS Dependent Fraud
Can a child be claimed on a tax return?
The IRS knows this happens, and has clear-cut ways of determining who has the right to claim a dependent on his tax return. However, the right to claim a child on a tax return is completely independent of any family court orders that may stand.
What happens if someone claims you as a dependent on their tax return?
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.
Can a dependent be a victim of identity theft?
If you don’t suspect anyone who could have claimed the dependent, your dependent may be a victim of identity theft. Due to federal privacy laws, the victim’s name and SSN must be listed as either the primary or secondary taxpayer on the fraudulent return; otherwise the IRS cannot disclose the return information.
How to claim a dependent from the IRS?
Using the IRS.gov Interactive Assistant, verify you meet the requirements to claim the dependent. If you are, take the following steps: Prepare paper tax return. Claim your dependent (s). Mail the completed tax return to the IRS.
Is it a felony to claim someone as a dependent?
Tax evasion is a felony with potentially severe criminal penalties. Under the tax code, improperly claiming someone as a dependent rises to the level of fraud, and therefore tax evasion, only if you demonstrate “willfulness.” That means you have to know that you’re breaking the law to be guilty of fraud.
How to report suspected tax fraud or identity theft?
Visit Identity Theft Central if you think someone stole your identity and used your Social Security number for employment or could use it to file a tax return. You can also visit Taxpayer Guide to Identity Theft. We don’t take tax law violation referrals over the phone.