I have a couple who had 2 foster children in their home and in every way they were qualified to receive the EIC. The parents claimed theme even though they did not live with them for more than 6 months.
The return I filed for them was just rejected. Any advice as to what to do from here? I'd at least like to make it so this other couple can't get the EIC next year.
Paper file. Not much else you can do.
I no longer remember the contact info for telling the IRS you think someone has defrauded them. But if that's what happened, maybe this couple can tell IRS what happened, naming names and whatever.
And this may be another one of those examples of "whoever files first, claiming something legal or not, initially gets whatever they asked for" and the 2nd claimant to file has to go thru "hail" and high water to get what they deserve. (They have to file on paper, they have to show proof 5 ways from Sunday that they deserve whatever the first taxpayer "stole" from them, etc.)
Perhaps if these people can prove, with their paper return -- or paper AMENDED return, if they want to file without the kids at first -- that they are supposed to get the EIC, maybe that will alert IRS not to give it without question to those other people next year. But if their computers aren't sophisticated enough to "know" who "doesn't deserve the EIC on such-and-such kids" then your clients may have to be prepared to fight this "shift" every year.
IRS is kicking EIC and dependent exemption out right & left. I had the same thing in 2009 only foster children lived the entire year. In TY 2008, IRS kicked out the step children AND the couples natural children. Fighting both but the 2008 client is now is tax court. Total mess !!!
When you supply the proof it is a nusiance, but they will allow the credit. Why are they "step children" and not Children?
Clarification --- "step children" to the taxpayer, spouses children from previous marrigage; "natural" are taxpayers and spouses children. The wrong child was claimed on rotating years. Spouse claimed the same child as the father claimed in error. IRS has denied all exemptions for all children so far.
This couple has no natural children of their own. They wound up with 4 foster children. 2 January through July 12th and the other 2 for the entire year and they are in the process of adopting them. All 4 are considered foster children for 2010. The 2 they are adopting came from an orphanage in Tucson. I honestly didn't know orphanages still existed.
The natural parents of the 1st 2 foster children is the one who claimed them. My clients had them for more than 6 months of the year. From all information I gathered, my client is entitled to all 4.
If orphanages didn't still exist, what would happen to kids whose parents died or gave them up, at a time when nobody was around yet to take them? Should they live at the firehouse and let the firemen take care of them? Should they live at the ASPCA with the puppies and kittens? Or did you just assume that if parents died, kids died with them? Or if parents said "I want to give my kid up for adoption" but nobody was available to take the kid, the parent kept them for a while?
By the way, I knew one kid years ago who loved the orphanage, where he stayed one holiday weekend while his foster parents went to a "boring," out-of-state church convention. He got to watch TV at the orphanage; his foster parents were of a strict religion that didn't believe in TV. This kid is the only kid who loved the orphanage, but not everyone hates orphanages the way my grandmother did.
You know, I guess I thought (as ignorant as this may be) that the foster system had taken the place of orphanages. Perhaps it's just the terminology that gave rise to my surprise. I just didn't know.
PAPER FILE...it will get sorted out in the end.
