A really complicated tax question?

Question

My fiance claimed our child for his 2004 taxes and recieved a little over 2000.00 back. He was not on her birth ceritificate at the time. IRS said that since he wasn't on her cert. he owed the money back. He didn't pay. Then in 2005 he didn't send in his taxes even though the IRS would have owed him. Then he filed for 2006, but was told he had to pay those taxes back as well as he was on probation from claiming dependents. The IRS would have owed him then as well. In 2005 we had a paternity test done to where he is named bio father to said child. He owed with 2004 and 2006 because of ineligability to claim our daughter. (He didn't know about a form that allowed him to claim dependents again). So, this year he had H&R block take care of all his taxes. They filed an amendment to his 2004 taxes sending the IRS the paternity court document.

All together IRS took everything he was supposed to get back (a little over $9000.00 dollars in taxes, interest, and penalties), but he is

Answer 1

Not paying the 2004 money back and then failing to file for 2005 was not a smart move. The paternity test should have been done as soon as the issue arose in 2004. Plus, some type of correspondence stating this to the IRS should have been sent and documented. You can't ignore the problem one year and expect that follow years surpluses should cover it. It's very bureaucratic and the IRS is not an entity you want to mess with. H&R should have handled this. You will not get interest for it. They have every legitimate right to claim that the fault lies on your husband, that is to say, a court would deem it so. If H&R is handling it, they should file the proper amendments. After that, the IRS will crunch their numbers (I guarantee their number will be lower than yours) and you will just have to take that. Any more effort put towards it will eat up any money you have through court costs. Lesson learned: make sure all your paper work is in order to their standards. The legal fees for not doing so otherwise are just not worth it.

Answer 2

Since he has paid a preparer, these questions should be directed at the preparer.  If he chooses, he can retain a qualified preparer to deal with the IRS over this matter.

He was denied the dependency exemption in 2004.  If the IRS demanded proof that the child was his, and he did not provide it in a timely manner, then he might have lost those tax benefits as well as being denied the EIC for a couple of years without extra paperwork.

If he did not submit that paperwork for 2005, he may not get the tax benefits for that year either.

It's impossible to say with the information you provided.  Have your preparer track this down and see what is going on for each year.

If a refund is issued to him (even if it is taken back for child support), the IRS adds interest to the refund.

Answer 3

No.  If he is eligible to earn interest, they will pay it.  I didn't realize you couldn't deduct a child unless you were a birth or adoptive parent.  Keep working with H & R Block until everything is done.  Have him be completely open and honest about the situation and ask them what else he should check into besides this child support order.  Not knowing the law is no excuse in the eyes of the government.  Save every receipt so that H & R Block can pick out what is deductible and what is not.  Also, every check to make payment.  H & R Block can handle any complaints he has.