Greed, Stimulus, and Dependency... Help??!

Question

So. Here goes. Technically speaking I could have been claimed as a dependent on my mother's tax return. I chose to claim myself because of my doubt that I could be claimed as a dependent and I wanted the stimulus check (needed it, I had no job when I was filing taxes for 2007.)

My mom didn't claim me, she owed something like $160, (no biggie, right? some people owe thousands...) She gets her stimulus check minus the 160 or something like that.

Anyway, she talked to the IRS tax help people and they said she should have claimed me, I shouldn't have claimed myself and she could have gotten something like $4000 if she had claimed me.

However, my mother and I are opposites: I did my taxes on time in a timely fashion because I simply HATE waiting and I needed money ASAP. (I was a full time student, still am and no job.)

She wants to file the 1040X in order to claim me, but if she does that I will absolutely have to pay back my stimulus check, right?

Mother said she's split the $4000 in half w/me... but... well, suffice to say I don't trust her with money!!

Anyway.. Any help or tips or NICE HELPFUL comments would be good.

Thank you.

Caro

Answer 1

You lose.  Sorry!

Go back and read the instructions on your tax return.  It says, "If someone can claim you as a dependent, do not check box 6a."  That means that you lose your personal exemption if someone CAN claim you.  The fact that they don't is irrelevant.

You have run into the exact situation that the law was intended to avoid.  Your mother has the right to amend her return and claim you as a dependent up to 3 years after the due date of the return.  Since you improperly claimed your exemption, the IRS will disallow it when your mother files the Form 1040-X.  (Actually, they'll send letters to both of you asking you to file an amended return if you should not have made the claim.  If you don't, they'll ask for proof of your claim.  If she proves hers, you automatically lose.)

You'll have to pay back the excess tax that is owed, plus penalties and interest.  You can minimize the hit by filing an amended return yourself right now and paying the additional tax.  The IRS will send you a bill assessing the penalties and interest as of the date of the bill and give you 30 days to pay it without any additional penalties or interest.  If you let their automatic process do this for you, you'll still owe the tax but the penalties and interest will be larger.

Answer 2

OK, this one gets a little tricky.  Technically, if your mom CAN claim you, then you aren't allowed to claim yourself.  So actually, claiming yourself wasn't legal for you to do if she COULD HAVE claimed you, even if she didn't.

Stimulus payments are sent out based on the original filings, not on amendments.  You are right that if she amends her return to claim you, you'd have to amend yours to drop your claim - and might have to pay back some extra income tax.  But for the stimulus, since you wouldn't have been able to claim it if your situation had been reversed, you hadn't claimed yourself originally and then filed an amendment claiming yourself, odds are you wouldn't have to pay it back.  But that's my opinion, and might not be correct, so don't count on it.

Answer 3

You probably won't have to pay the stimulus payment back.

The best bet is for you to file an amended return first. That way, when your mother files it won't trigger an audit where she will have to prove that she can claim you. But since amended returns are taking up to 4 months right now, it could be quite a while before your mom sees that big refund.  

Answer 4

You legally cannot claim yourself even if your mother didnt claim you. IT is better to do it right and amend the form. 4000 is a lot more.