My parents with my permission took my children their grandchildren off on their taxes but they do live with me I did this so I can pay the money back how do I file that

[shunkin1]

I let my parents take my children off on their taxes in order to pay back money that I owed them but they live with me do I just not mentioned the children at all?

[macuser_22]

You and you parents cannot agree to violate tax law and file a fraudulent tax return.  The children must have physically lived with the grandparents more then half of 2020 to be qualified child dependents.   They would have to lie on their tax return to claim the child(ren).

[SweetieJean]

Whoa...You cannot just decide who can or cannot claim your children.  The tax law must be followed.  Otherwise, this is fraud.

Only the person with whom the children lived for more than 50% of 2020 gets to claim them.  I suggest you and your parents look into filing amended returns for any earlier years where the children were claimed improperly.

[Mike9241]

so you do not file a fraudulent return, you should claim your children on your return especially if you have not yet filed. and tell your parents they need to amend their tax return. if they do so before 5/17/2021 there will be no penalties or interest. if both you and your parents have filed you both have until 5/17/2021 to amend without penalties..  prior years are a different matter there may be penalties and interest but the taxpayer who underreported their tax liability may escape fraud penalties.  if the IRS catches this, you will find the cost of legal representation can be extremely expensive. 

[shunkin1]

Well thank you for your response but I did check in with H&R Block and other places as well to double-check that I was doing everything right they help financially support my children who are underage where we live in their home and they help over 50% of the financial needs that my children have they take care of so yes they are able to be reimbursed that in their taxes

[shunkin1]

Let's clear something up yes you can when it comes to financial needs and them supporting the financial needs of my children and keeping a roof over their heads as well as mine they are able to take them off on their taxes so we are not doing fraud here just to clear that up I have double-checked with H&R Block as well as they did when they did their taxes so we can get over the fraud thing that is not what is going on here everything that is owed to them is because they financially haven't helped clothes my children feed my children and let us live under their roof in their home when they have moved out into a different home

[shunkin1]

Just clearing something up we have cleared it up with their tax and their H&R Block system that they use it is not fraudulent first of all they financially support my children with the needs of clothing food Etc and allow us to live under the roof of their home while they live elsewhere so that we have a place to live so they are 100% entitled to the grandparent law of tax return they just can't get earned income that we have figured it out thank you very much

[shunkin1]

Trying to clear this up we have cleared this up with H&R Block the people they do their taxes with and nothing is fraudulent there is no fraud going on there is a grandparents clause in there that they financially help support my children with clothes food Necessities as well as let us live under the roof of their home while they live elsewhere the only thing they're not eligible is for earned income just to clear something up in case anyone else had some questions on it if grandparents are financially supporting the grandchildren over 6 months in a consecutive year with over 50% of their needs they're entitled to take them off on their taxes they just cannot claim earned income

[macuser_22]

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@shunkin1 wrote:

Well thank you for your response but I did check in with H&R Block and other places as well to double-check that I was doing everything right they help financially support my children who are underage where we live in their home and they help over 50% of the financial needs that my children have they take care of so yes they are able to be reimbursed that in their taxes

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Your question said "They live with me". 

Now you are saying that they (and you) lived with your parents.    That is a different question.

If they lived with your parent  more than half the year then your parents CAN claim them if you do not.

[VolvoGirl]

But she threw in a new wrinkle.  They all do live in the Grandparents house but the grandparents don't live there with them.  Does that change it?  So technically they don't live with the grandparents.

[macuser_22]

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@VolvoGirl wrote:

But she threw in a new wrinkle.  They all do live in the Grandparents house but the grandparents don't live there with them.  Does that change it?  So technically they don't live with the grandparents.

---

For the grandparents to claim the child(ren) must have physically lived with them more then half the year.

If they all lived together then the following rules apply:

Qualifying Child of More Than One Person

[Quote from IRS Publication 501]
Sometimes, a child meets the relationship, age, residency, support, and joint return tests to be a qualifying child of more than one person. Although the child is a qualifying child of each of these persons, only one person can actually treat the child as a qualifying child to take all of the following tax benefits (provided the person is eligible for each benefit).

1. The child tax credit or credit for other dependents.
2. Head of household filing status.
3. The credit for child and dependent care expenses.
4. The exclusion from income for dependent care benefits.
5. The earned income credit.

The other person can’t take any of these benefits based on this qualifying child. In other words, you and the other person can’t agree to divide these tax benefits between you.

Tiebreaker rules.

To determine which person can treat the child as a qualifying child to claim these five tax benefits, the following tiebreaker rules apply.

1 - If only one of the persons is the child's parent, the child is treated as the qualifying child of the parent.

2 - If the parents file a joint return together and can claim the child as a qualifying child, the child is treated as the qualifying child of the parents.

3 - If the parents don't file a joint return together but both parents claim the child as a qualifying child, the IRS will treat the child as the qualifying child of the parent with whom the child lived for the longer period of time during the year. If the child lived with each parent for the same amount of time, the IRS will treat the child as the qualifying child of the parent who had the higher adjusted gross income (AGI) for the year.

4- If no parent can claim the child as a qualifying child, the child is treated as the qualifying child of the person who had the highest AGI for the year.

5 - If a parent can claim the child as a qualifying child but no parent does so claim the child, the child is treated as the qualifying child of the person who had the highest AGI for the year, but only if that person's AGI is higher than the highest AGI of any of the child's parents who can claim the child.

Subject to these tiebreaker rules, you and the other person may be able to choose which of you claims the child as a qualifying child.
[end quote]

https://www.irs.gov/publications/p501#en_US_2020_publink1000220917

[pcofield]

Yes, but there are other tests that must be met.  The children must live with the provider for 6 monts or more.  

[Critter-3]

@pcofield 

First the dependency rules must be applied.  Then if the child is a qualifying dependent of more than one person there are more rules to follow.  The parent has the superior right to claim the child however if they don't claim the child  then the child may be claimed by the other person who is qualified to claim them under certain circumstances ... read the other post for the entire list of rules.