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Divorced parents claiming same dependent could lead to audit

On Behalf of | Apr 29, 2020 | Tax Controversies |

Filing taxes may seem like simply filling in certain information on the correct forms, but the chance exists for numerous issues to arise during filing. In some cases, a New York resident could face an audit if the IRS believes that something in that individual’s information is incorrect or if some other problem arises. One issue in particular that could lead to a closer look is if a child is claimed as a dependent by more than one person.

This type of problem could arise for divorced parents especially. After all, both parents may feel that they can claim the child as a dependent. However, if one child is claimed as a dependent on both parents’ tax returns, it could raise a red flag with the IRS. As a result, the agency may have to determine who can claim the child.

In order to claim a child as a dependent, the parent must have lived with the child the most, which is typically the case with the custodial parent. Often, parents want to claim a child as a dependent because it can qualify a person for credits and deductions. The custodial parent could relinquish the right to claim the child as a dependent if he or she wanted to, but the correct form would have to be filled out to give that claim to the other parent.

Facing a tax audit over dependents can be difficult to handle. It is possible that the situation could become even more complicated if the IRS says that one parent can claim a child when the other parent does not feel that should be the case. As a result, New York parents may need to fully understand their rights when it comes to claiming dependents, especially after divorce.