If a parent sells a child's ss #. She didn't work all year. But sells it to her mother(grandmother of child) to use on her income taxes. what can happen?

[chita41909]

Custodial parent will let her mother, or brother use the child's SS# instead of letting the non custodial parent use it. In return, they'll (mother, brother) will pay her a sum of money for getting to use the #. Also she's illegal and only has a pin # to be able to file her income taxes. But does not allow the father(non custodial parent) to use the child. What can happen to her. Is she allowed to do that?

[SweetieJean]

"In return, they'll (mother, brother) will pay her a sum of money for getting to use the #."  How do you know this?

[Hal_Al]

It doesn't matter. If the brother/uncle or mother/grandmother meet the rules for claiming the child, the fact that money changed hands is not relevant.

[Opus 17 · Accepted solution]

The penalty for filing an intentionally false tax return is to pay the taxes back, with a monetary penalty.  If the fraudulent tax return claimed earned income credit, the taxpayer can be banned from claiming EIC for the next two years.

However, there are a lot of facts missing and the situation may not be illegal.

If the child, mother and grandmother all live together for at least half the year, then the grandmother can legally claim the child as a dependent if the grandmother earns more money than the mother.

If the child and mother live separately from the grandmother, and if the mother does not file a tax return (did not earn enough to be required to file one and does not file one to claim credits or benefits), then no one can claim the child as a qualifying child dependent.  However, there is a second kind of dependent called a qualifying relative.  A child can be a qualifying relative dependent of an aunt, uncle, grandparent or non-custodial parent but only if that person pays more than half of the child's living expenses and only if the child is not a qualifying child dependent of anyone else.  Since only one person can pay more than half of the child's support, only one relative could qualify to claim the child as a qualifying relative dependent.  If the child's support is paid by several people or if some of the child's support is paid by the government (welfare, section 8, etc) then maybe no one pays more than half.  In this case it is possible to assign the dependent to one person but only if everyone who paid partial support signs an agreement.

However, a qualifying relative dependent does not allow the taxpayer to claim earned income credit or use head of household filing status.  The taxpayer can only claim the dependent exemption and the child tax credit.

[Hal_Al]

Under IRS rules (and tax law) another relative  (e.g. grandparent or uncle) that lives with the child has a higher right to claim the child than the non custodial parent does. The non-custodial parent can only claim the child with written permission (on IRS Form 8332) from the custodial parent. The other relative does not even need the custodial parent's permission. He/she just needs to know that the custodial parent is not claiming the child. The fact that the relative is willing to share the tax savings with the custodial parent is not germane.

[Hal_Al]

The taxpayer can only claim the dependent exemption for a qualifying relative dependent. They cannot claim the child tax credit. The is a special rule that allows the non custodial parent to claim the child tax credit, when he has form 8332, but other  relatives cannot.

[SweetieJean]

"sells a child's ss #."  Did money change hands?  Notify the police.

[Hal_Al]

One divorced parent's "sells a child's ss #" is just the other divorced parent's "share the tax refund with family".

[chita41909]

Yes money does change hands. We know this because she'll tell the non custodial parent. 'I let my mom use him, she's going to pay me 400 when she gets her refund for him'. The Child and grandmother do not live together they live about 30 minutes from each other.

[SweetieJean]

How does custodial parent support herself and the child?

[chita41909]

She'll move around from a friends house to a friends house to another friends house until they ask for some kind of money for staying at the their house. Any other year she will work. But since she doesn't get the same kind of refund since she only has a PIN number to work she'll still sell the ss# because she 'doesn't get the same big amount like everyone else'

[TaxGuyBill]

As Opus said, if the relative paid for over 50% of the support for the child, the relative MIGHT be able to claim the child as a dependent (but not for the Child Tax Credit or Earned Income credit), even if they don't live together.  It depends on the relationship.

If the relative did not provide over 50% of the support of the child, or if the relative claims the Child Tax Credit or Earned Income Credit (which result in the 'big amount' of refunds), the relative is filing a false tax return and the mother is assisting them.

Besides the repaying the refund that the relative should not have received (plus penalties and interest on the taxes), the penalty for lying on a tax return is up to $100,000 and/or 3 years in jail.  Both the relative and the mother could be subject to the penalty for perjury.