Hello, about 2013/14 I was audited for claiming my step daughter and girlfriend. It was an honest mistake on my part but the outcome was -10k. My taxes have been intercepted all these years and I sti

[lino-diaz25]

Still owe. What would be the smartest move from me going forward?

[Lisa995]

The smartest thing would be to get on a payment plan and get it paid off.

[Hal_Al]

The child of your girlfriend, is not a stepchild for tax purposes. She is considered an unrelated person and as such can not be a "qualifying child" dependent.  That is, she cannot qualify you for the child tax credit, Earned income credit, Head of household filing status or the day care credit. At most, she can only be a standard dependent for the old dependent exemption ($4000+/- deduction) and new (in 2018) "other dependent" credit.

[Opus 17]

It's far too late to dispute the finding even if you wanted to, and you seem to agree that you owed the tax.  The best thing to do is the same as with any other debt.  Pay it off as fast as you can.  Don't just wait for your refund to be intercepted every year.  You can get on a monthly payment plan if you aren't already, or make extra payments toward the debt online whenever you can afford it.  Treat it like a high interest credit card that you need to pay off as soon as you can.  Reduce your other spending if possible. And so on.

[Opus 17]

I should add that sometimes the IRS will accept an offer in compromise -- pay some amount immediately, in return for canceling the rest of the debt.  Your eligibility depends on your financial situation (if you could afford to pay and don't feel like it, you are unlikely to successfully negotiate a deal), and you may want to engage an enrolled agent (accountant licensed to practice before the IRS) to negotiate for you, and that will cost you, but it might be worth it to ask.

Avoid IRS settlement companies that make wild claims on late night TV and radio.

[Opus 17]

<a rel="nofollow" target="_blank" href="https://www.irs.gov/payments/offer-in-compromise">https://www.irs.gov/payments/offer-in-compromise</...>