screwy tax refund, advice pls

[Redsand426]

I know this is probably the wrong forum to ask this, but I know there are some smart people here and I'm already registered so I'll ask away.

My dad accidentally claimed me as a dependent on his '07 tax return about a month ago. I did not know this, claimed myself and e-filed my taxes on the 15th (last day) and was notified via email a few days later that both my federal and state taxes had been rejected because both my dad and I claimed myself.

I'm 20 and live at home, but I have a full time job, pay for my school and pay for my car and insurance. The point is, my dad doesn't come close to supporting 50% of my expenses as required by the IRS to claim someone over 18 as a dependant.

So basically, we are both screwed... he might get audited and I lose my $280school credit tax refund which will NOT transfer over to my dad, plus a big chunk of my income tax refund which most of has been transfered to my dad. If I claim myself I get an $850 federal refund. If my dad claims me, I only get a $66 federal refund... yeah BIG difference.

So it's already past the 15th. My taxes have been rejected and now I'm worrying about a late fee even though I turned them in on time. My dad has to amend his taxes by deleting me as a dependent, so I can then in turn claim myself and hand in my taxes. God knows how long that will take... Plus I probably will get a big delay for the $600 credit the government is handing out to everyone.

Anyone have some good advice or a quick and painless way to go about handling this situation?

 

[Purple-Haze]

You can't ask your dad to pay you the difference? That way, he doesn't get audited and you get your money.

 

[Redsand426]

How would he avoid being audited by the IRS if he pays me the difference? He claimed me as a dependent when he can't, so if he pays me and then the IRS audits him, he is screwed.

And like I said, the school credit tax refund does not transfer over to my dad and I still lose it. So it's $300 out of his pocket to pay me the difference or its just my loss all together (even though I paid for my schooling). Even though he screwed up, I'd like it to be fair.

That is an option that crossed my mind, but the whole audit thing and school refund jacks things up.

 

[Purple-Haze]

How would he avoid being audited by the IRS if he pays me the difference? He claimed me as a dependent when he can't, so if he pays me and then the IRS audits him, he is screwed.

And like I said, the school credit tax refund does not transfer over to my dad and I still lose it. So it's $300 out of his pocket to pay me the difference or its just my loss all together (even though I paid for my schooling). Even though he screwed up, I'd like it to be fair.

That is an option that crossed my mind, but the whole audit thing and school refund jacks things up.

I am not familar with the IRS system, so take what I say with a grain of salt.

Is he still going to be audited if he leaves things as they are? How about you get him to pay you whatever he gained from claiming you as a dependent and leave it at that (since you don't want him to pay anything out of his pocket).

 

[Redsand426]

I am not familar with the IRS system, so take what I say with a grain of salt.

Is he still going to be audited if he leaves things as they are? How about you get him to pay you whatever he gained from claiming you as a dependent and leave it at that (since you don't want him to pay anything out of his pocket).

Yes there is a chance of him being audited for claiming a 20yr old as a dependent, unless he can prove he supports 50% of my expenses, which he does not. Is he likely to be audited? I dunno... I don't know much about the IRS either.

So if I go that route, he might get audited and I lose $300 because I cannot get my school tax credit refund because someone else has claimed me, which sux ... however it's an option, but not very appealing to say the least. And thats likely what I'll do, but I wanted to see if anyone had more ideas.

The only other option I can think of is the amending process, but I picture that being a 6 month ordeal of sending letter after letter back and forth to the IRS trying to get all this crap sorted out... and me with no refund for the next year and a half and missing out on the credit the gov is giving out in may.

 

[Mr.Positive]

Hey Redsand, I would suggest talking to a certified tax accountant. Having a 3rd party help, could really make a difference.

I have relatives that do taxes for a living. I do not know much about it, but this type of situation, I know that they could handle.

I'd ask around and find someone that's recommended, not an H&R Block place, but a local tax person could definitely sort this out.

Mistakes happen, I'm sure this could be fixed, though there might be a delay on your refund.

 

[FoolsCause]

I know this is probably the wrong forum to ask this, but I know there are some smart people here and I'm already registered so I'll ask away.

My dad accidentally claimed me as a dependent on his '07 tax return about a month ago. I did not know this, claimed myself and e-filed my taxes on the 15th (last day) and was notified via email a few days later that both my federal and state taxes had been rejected because both my dad and I claimed myself.

That's why it's not a good idea to wait until the last day to file taxes. Why wait until the last day anyhow when you have a refund coming?

I'm 20 and live at home, but I have a full time job, pay for my school and pay for my car and insurance. The point is, my dad doesn't come close to supporting 50% of my expenses as required by the IRS to claim someone over 18 as a dependant.

It's a common scenario, parents claiming older children who are no longer "dependents" for tax purposes.

So basically, we are both screwed... he might get audited and I lose my $280school credit tax refund which will NOT transfer over to my dad, plus a big chunk of my income tax refund which most of has been transfered to my dad. If I claim myself I get an $850 federal refund. If my dad claims me, I only get a $66 federal refund... yeah BIG difference.

The odds of him getting audited aren't great and he'll probably just have to pay some penalties and interest if so.

So it's already past the 15th. My taxes have been rejected and now I'm worrying about a late fee even though I turned them in on time. My dad has to amend his taxes by deleting me as a dependent, so I can then in turn claim myself and hand in my taxes. God knows how long that will take... Plus I probably will get a big delay for the $600 credit the government is handing out to everyone.

Is your dad procrastinating or plain unwilling to file an amendment?

Expect a big delay for the "stimulus payment" credit.

Anyone have some good advice or a quick and painless way to go about handling this situation?

Take your dad to the local tax office to file his 1040X in a timely manner. Then resubmit your return.