Monday, March 25, 2013

Moolah Monday - Tax Trouble

I finally did my taxes a few weeks ago.  I don't know what I was thinking on two fronts.  First, I must have been anxious about the results or how difficult it would be because I procrastinated longer than usual (and my hubby let mie).  Surprisingly, it was much easier than I expected once I got everything organized.  Second, why on Earth did I wait so long?  I knew this would be a problem.

As foster parents we're allowed to claim children as dependents if they were given into our care by court order, we provided for more than 50% of their expenses, and they were in our custody more than 6 months. We had 2 kiddos (#9 & #10) that qualified that way.  It's always a gamble in doing your taxes whether or not the current family will go ahead and claim the children regardless of whether or not they're legally allowed to and so it's always a good idea to jump right on your taxes as soon as you can if you plan to claim children who are or were in foster care.  Even though it is tax fraud to illegally claim someone as a dependent, families do it all the time and it's pretty annoying to get it corrected.

As a side note...gosh it seems like a long time since 9 & 10 were with us!

Sure enough, when I submitted my taxes electronically it immediately came back as rejected because social security numbers were used twice.  I tried to fix it that night but the software I use was being squirrelly, that or we have a much bigger problem on our hands.  The system is insisting that two of my 4 kids' SSNs have already been claimed.  This makes logical sense as someone must have claimed #9 and #10 (illegally of course).  The confusing thing at this point is that the software is insisting that I change the SSNs for Logan and Summer, not #9 & #10, as if THEY have already been claimed instead of the fosters.  As I said, the software is either being irritatingly squirrelly or worse, we have a bigger problem on our hands.

I'm told this situation is easy to correct.  Because our tax situation is somewhat complex with foster children, higher income, and rental property, I always purchase the extra service to deal with the IRS should they come back and audit (or have other issues).  Last year this worked out very well for us because the IRS rejected Summer as a dependent because she was adopted AND rejected her SSN because her adopted name didn't match the name on her SSN.  It was a complicated mess to sort out but in the end it worked well to have the agency folks run it down for us.

Here's hoping it's as easy to solve this time around.  I'm headed now to figure it out.


G said...

We had a similar problem. The program was insisting that our first-born bio child SSN was used by someone else. We were pretty sure that it was the placement kiddos that we'd claimed.

And we filed in early February!

Called the IRS to try to figure out if we had, as you say "a bigger problem", and they told us they couldn't say which SSN was a dupe. Suggested we remove dependents one at a time and try again. (What? Wouldn't we then have to do an amended return?)

We paper-filed. We were expecting to get some sort of letter about the problem. Never happened. A few weeks ago, our (correct) refund just showed up in the bank account.

Hope yours gets fixed just as painlessly!

Dana Beam said...

Oh boy the fun we're about to have. I can hardly wait for this part of the process (please note allllll the sarcasm).