My sister takes care of her 2 children, but her ex-fiance filed first, yet doesn't put in a dime into taking care of the kids. How can she get most or all of the refund?

[xmasbaby0 · Accepted solution]

If the ex e-filed first claiming the kids, then when she e-files her return will be rejected.  She needs to print, sign and mail her return to the IRS.  Mailed returns are processed differently, so it can be processed with her kids as her dependents.  Eventually the IRS will contact both of them and sort it out.  Advise her to document as much as she can to prove she supported the children.  The ex may face repayment of any credits based on claiming the kids, plus fine and penalties.

[Hal_Al]

If someone else claimed your child inappropriately, and if they file first, your return will be rejected if e-filed. You would then need to file a return on paper, claiming the child as  appropriate. The IRS will process your return and send you your refund, in the normal time. Shortly (up to a year) thereafter, you'll receive a letter from the IRS, stating that your child was claimed on another return. It will tell you that if you made a mistake to file an amended return and if you didn't make a mistake to do nothing. The other party will get the same letter you did. If one of you doesn't file an amended return, unclaiming the child, the next letter, from the IRS, will require you to provide proof. Be sure to reply in a timely manner.
Winner gets the tax benefits; loser gets to pay the IRS back with penalties and interest.  The custodial parent almost always wins. The non-custodial parent can only claim the child as a dependent if the custodial parent gives permission (on form 8332) or if it's spelled out in a pre 2009 divorce decree.   

<a rel="nofollow" target="_blank" href="http://www.eitc.irs.gov/EITCCentral/f886-h-dep.pdf">www.eitc.irs.gov/EITCCentral/f886-h-dep.pdf</a>