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New Member

Amending a tax return after a refund offset payment.

My partner filed her tax return as single and claimed our daughter in order to obtain the child tax and earned income credit. She just received a letter from the IRS stating her refund has been seized by the department of education in order to pay a student loan that is in collections. A notice was not sent to her that the refund would be seized in order to pay the debt. If we had known this was a possibility, I would have claimed our daughter on my taxes in order to obtain the credits. Can my partner and I both amend our tax returns to where I claim my daughter as a dependent and she does not claim her as a dependent? If so, would that mean my partner owes the IRS what money the IRS paid to the department of education, or would the department of education refund the money back to the IRS because she no longer has a refund?
3 Replies
AJ
Level 6

Amending a tax return after a refund offset payment.

My intent is to keep you out of trouble by trying to explain a few tax rules in hopes that this might prevent additional problems for you and your partner.  Please be aware that a dependency for a child is not something that you are normally free to just move around between people to get more money. (There are some exceptions for if you are divorced/separated under a legal arrangement.)  Instead, the IRS has tax laws that define who can claim the child. (I'm assuming that you are not married, and that the mother, your partner, has legal custody for the child, and your partner lived with the child more nights than you did.)  In the process of filing her return, your partner would have needed to make legal statements  to certify that she is the one who is entitled to the dependency.  Your partner needed to state that the child lived with her for over half of the year.  And since she filed single, she would have indicated that the child is not a qualifying child of another taxpayer.   I assume that her original answers were truthful.   So if you now try to change the original story with an amendment, then you might also need to have an explanation ready to explain why her previous statements should be considered truthful at the time they were made.  Also, you should be able to defend why any statements on the amended return are the real truth with regard to custody and support of the child.  Please understand that the IRS is normally sympathetic to simple mathematical errors.  But when the IRS believes one or both of you is making false statements to manipulate credits, then the IRS has power to take some or all of the credits back for this year and to deny them for future years. Bottom line: please be honest so that you do not make matters worse.  I wish you both well for your futures. 

New Member

Amending a tax return after a refund offset payment.

Thank you so much for your reply,

My partner and I live together and are both with our daughter an equal amount of time. We both have custody of her. Both of us would have been eligible to claim our daughter, but my partner claimed her because only one of us can claim her.

Based on your reply, it sounds like even though we were both eligible to claim our daughter as a dependent, amending our tax returns to where I claim my daughter and my partner no longer claims my daughter is not possible. Is that correct?
Highlighted
AJ
Level 6

Amending a tax return after a refund offset payment.

     When both parents live together with the child, then the IRS has tiebreaker rules that define who has the priority to take the deduction. You might win the tiebreaker if you have the higher AGI.   The tiebreaker rules are explained at this link:

https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/qualifying-child-of-more...

     Yes, it is "possible" to amend your returns. Be aware that if your partner amends, then she will be required to pay back any excess money which she received.  I don't believe that it will matter that the money was taken by DOE.  Instead, I believe that the IRS will book the money as being returned to her accounts. Do you think that the DOE will agree to send money to you that would increase your debt while your account is already in collections?  I can only say that if you choose to amend, then accept the fact that you could be begging for questions and could be taking risks that might not go in your favor.  You will need to make your own decision on this. Just don't commit any fraud to manipulate tax credits because that could create a long-term financial problem that you don't need.