How do I answer in the interview about my 1099G? Me & my gf claimed our son in 2015. IRS caught it & I had to send fed return by mail. State adj. return.for 1 exemption.

[taxlady3]

It should have been 2 exemptions. Now I have to get a fed. transcript to prove to Ohio that I can claim 2.  So I really should have had a $242 refund instead of a $174.38. TT thinks I received a $242 refund.  How do I handle this? Thanks, in advance.

[Opus 17]

Normally you have to claim the same number of dependents on your state return as your federal return.  Can you explain the problem in more detail?

[taxlady3]

I'll tell you what I did and maybe you can shed some more light on this.  On my 2015 return I claimed my son and so did my girlfriend, even though she did it by mistake.  I did this electronically and Federal wouldn't accept my return because someone already claimed my son. Therefore, I  had to mail it in. So I did claim 2 exemptions and I did receive the refund that I thought I should get. When I filed my state (OHIO), they said I should have claimed 1 exemption, based on my federal return.  Ohio adjusted my refund.  I received a refund of $174.38 instead of the $242.  Now Ohio is telling me I have to get a Federal transcript of my 2015 taxes, which already is in process.  I guess I will deal with that when it gets here.  For 2016, I entered my 1099G as $174.38 because that is what I actually received.  If I receive a partial refund later this year for 2015 taxes I will claim it on my 2017 taxes.  Maybe I just answered my own question, but if you want to comment on ANYTHING that I mentioned, please feel free too.  I so appreciate your help.

[Opus 17 · Accepted solution]

You are correct, you should correct the refund amount to what you actually received.

State tax refunds are taxable income in the year they were actually paid to you (and only if you itemized and deducted your state taxes originally.)  Turbotax doesn't know the state has adjusted your refund.  If the state accepts your explanation and pays the rest of the refund, then that would be income you will report on your next tax return along with the regular state refund from this year.

I'm a bit puzzled on where the state got the information that you should not have claimed your child.  I don't see how that would have come from the IRS.  If you e-filed a federal and state return claiming your son as a dependent, and the state return was accepted while the federal return was rejected, but you then mailed the federal return, the state and federal returns should have matched.

Of course, if you and your girlfriend both claimed the same child on the state and federal returns, your girlfriend needs to file amended returns with both the IRS and the state to remove the dependent and probably pay back part of her refund.  The state might have adjusted your tax return because of hers.  If she filed an amended federal return, did she forget to file a state return?  Or if she has not filed either amended return, maybe Ohio is faster at catching this kind of mistake.  

Depending on what the underlying problem is, your GF may need to file an amended return with Ohio to remove your son from her return, before they will accept your return claiming your son as a dependent. 

[taxlady3]

Wow.  I never thought of what she did or if she has to amend her return.  Thank you for enlightening me.  I really appreciate your help.

[Opus 17]

The problem is that only one taxpayer can claim the child as a dependent.  If you want that to be you for 2015, then your GF needs to file amended returns to remove the child.  You will want to start with her transcript for 2015 as well to make sure she did claim the dependent and that the IRS did not already adjust her return.  If she did claim the dependent but you want to be the person who does, then she needs to file amended federal and state returns and that needs to be part of your answer to Ohio when you work on this issue with them.