How to Report Someone to the IRS for Claiming a Child

Reporting someone to the IRS for improperly claiming a child on their tax return is a significant issue with serious consequences. This situation often arises when individuals wrongfully list dependents to reduce their taxable income or increase refunds.

Claiming a Child: Key Dependents Criteria

The IRS has strict rules for claiming a child as a dependent, focusing on relationship, age, residency, and support. The relationship test covers children, stepchildren, foster children, siblings, and their descendants. The age test requires the child to be under 19, or under 24 if a full-time student, with no age limit for permanently disabled children. Residency rules mandate the child live with the taxpayer for more than half the year. The support test ensures the child does not provide more than half of their own financial support.

Identifying Unauthorized Claims

Unauthorized claims often arise when multiple taxpayers claim the same child in shared custody situations. The IRS resolves these disputes using tiebreaker rules. Discrepancies between reported income and the ability to financially support a dependent may also signal improper claims. Through data analytics, the IRS compares tax returns with Social Security records and other sources to identify suspicious patterns. Taxpayers should keep custody agreements and proof of residency to validate their claims if questioned.

Steps to File a Report

To report unauthorized claims, gather relevant evidence, such as custody agreements, school records, or proof of residency. Fill out IRS Form 3949-A, providing details about the alleged fraud, including the individual’s name, address, and taxpayer identification number if available. Mail the form to the IRS, as reports are not accepted via email or phone. While the IRS does not provide updates on investigations, submitting a report can initiate an inquiry.

Potential IRS Actions

Once a report is submitted, the IRS may conduct a preliminary review and, if necessary, a formal audit. During an audit, individuals must provide documentation to substantiate their dependent claims. If insufficient evidence is provided, the IRS may disallow the claim, recalculate the tax liability, and impose penalties. A negligence penalty of up to 20% of the understated tax may also be applied.

Maintaining Records

Accurate records are critical in resolving disputes over dependent claims. Essential documents include school enrollment forms, medical records, and utility bills. For shared custody situations, court orders or custody agreements are vital. Financial records, such as receipts for childcare or rent payments, can demonstrate support contributions. The IRS advises keeping these documents for at least three years, though retaining them longer may be prudent for ongoing disputes or claims spanning multiple years.