Discussion:Both clients of firm - both want to take kids
From TaxAlmanac
Discussion Forum Index --> Tax Questions --> Both clients of firm - both want to take kids
| 20 March 2007 | |
| Both clients of firm. Ex-husband came first and claimed the kid. I just bought the tax practice this year, so I don't know all the client's indivdual situations yet. Over 700 clients.
Anyhow, husband claimed child and now ex-wife wants to enforce divorce agreement and claim child. What do I do if she wants to claim child after I already e-filed the husband and he has the child. From a legal standpoint, she might have the right. The husbands explanation makes it appear he has the right as well. Can I get in trouble for knowingly filing the same dependent on two different returns? Fred | |
| 20 March 2007 | |
| Let's see if we can get the wisdom of Solomon on this one. What say you, split the child??? | |
| 20 March 2007 | |
| when one rejects, you call her and say "looks like somebody already took JR as a dependent. Wonder who that could be? Then mail in paper return if she still insists she is eligible to claim child. | |
| 20 March 2007 | |
| quick response. i like that. they both have valid arguments for claiming the child. the husband came in. I didn't know we did the ex's return at the time. He informed me that the child now lives with him full time and therefore he's entitled to the child.
She found out and is coming by today to chat. The court order says every other year the other one gets the child. The living conditions have changed. The ex wants me to amend the husband's return, I said I can't without his permission. I am going to advise her of the consequences that will occur if we file that way. But can I get in trouble, especially if we attach an explanation that the ex also claimed the child. | |
| 20 March 2007 | |
| The right approach would be to amend the husband's return by omitting the child. Is the wife your client too? It's always wise NOT to have ex-husband-and-wife as your clients due to conflict of interest - unless you have the pleasure of being sued by one of them.
Agreed with Glmpllc that you'll get into a LOT of trouble if you knowingly file the same dependent on two separate returns. You could be sanctioned by the IRS - and worse your license revoked by your state board of accountancy since you're a CPA. | |
Kytaxpreparer (talk|edits) said: | 20 March 2007 |
| If divorce agreement says she claims child, then she claims child.... | |
| 20 March 2007 | |
| WRONG, who has physical custody for more than half a year???? | |
Kytaxpreparer (talk|edits) said: | 20 March 2007 |
| Wouldnt divorce decree outweight as far as dependent exemption??? Physical custody would determine EIC,HOH.. | |
| March 20, 2007 | |
| Sorry Kev, I'm with KY. Until someone changes the court decree, I'm going by it. | |
| 20 March 2007 | |
| There is another point that is being overlooked in this discussion. You have a conflict of interest between ex-spouses. I believe Circ 230 addresses what your responsibilities are when you have a conflict of interests. You need to get both clients to sign acknowledgement that they are aware of the conflict and consent for you to continue to be their tax preparer or terminate one of them as your client. | |
| March 20, 2007 | |
| Agree. If you did them both, you're in a pickle. You know that you can only manually file the wife's now, and you know that mail is coming from IRS requiring someone to amend. | |
| 20 March 2007 | |
| At the time I did the husbands return, I was not aware that I had both as clients. I had a situation earlier in the year where a couple divorced and they both stayed as my client. I was able to show them that filing together was more beneficial.
If it becomes a conflict of interest, I would definitely get rid of one of them. I think in this case I just need to feed them both all the right information and then see how the best refund can be obtained from a taking of the kids standpoint. Husband had physical custody of the son. Wife had physical custody of daughter. Both can claim HOH. Both can only claim one for EIC. I would assume that if wife wants to take the child and the husband doesn't want to amend, then I must make a decision. If it comes to that, then one must go. My first thought is that they should let me analyze the returns to obtain the largest refund possible from the governing authorities. | |
| 20 March 2007 | |
| Hate to say this, but my gut instint is to dump em both because they are both giving you much more grief than you'll get money out of this... | |
Death&Taxes (talk|edits) said: | 20 March 2007 |
| "My first thought is that they should let me analyze the returns to obtain the largest refund possible from the governing authorities." That would be the correct course IF they were still married, but now the correct course is to prepare proper tax returns. The formula for failure is trying to please everyone.
By the way, which child are we talking about? And are you sure this 'custody' mentioned in the decree to allow both to claim HOH is not eyewash conjured up by lawyers and your predecessor. I've told clients with two children it would be nice to have each the custody parent, and then seen it in the decree but wondered if it is really followed. | |
| 20 March 2007 | |
| Don't any of you follow the Uniform Definition of a Child rules in your practice? JR I would have expected you to. | |
| March 20, 2007 | |
| Did father claim both kids?? Looks like he would only be allowed to claim the child that he had physical custody of. | |
| 20 March 2007 | |
| Kevin, I believe that children of divorced spouses can be considered the qualifying child of the non-custodial spouse through an 8332 or a divorce decree that meets certain requirements. | |
| 20 March 2007 | |
| As Kevinh5 says, read Uniform Definition of a Child. If there is a disagreement between the parents, the IRS is NOT bound by a divorce court and will use federal law to determine who claims the child, 1st physical presence, then AGI. | |
| March 20, 2007 | |
| Yes, but I would hammer them both that they agreed to the Decree, so it stands until someone shows me something different, and therefore, there is no dispute! I'm not getting in the middle of it, that's why there are judges. | |
Death&Taxes (talk|edits) said: | 20 March 2007 |
| btw, Kevin, years ago an IRS Appeals officer did split the kid in a case of mine. | |
| 20 March 2007 | |
| Fstein, you HAVE a conflict of interests. You have two clients whose interests are at odds. I think that defines a conflict of interests. Therefore, before worrying about any calculations to see which way is best for anyone, you need to get informed consent in writing before continuing. Here is Circ 230:
Sec 10.29 – Conflicting Interests (a) Except as provided by paragraph (b) of this section, a practitioner shall not represent a client in his or her practice before the Internal Revenue Service if the representation involves a conflict of interest. A conflict of interest exists if: 1) The representation of one client will be directly adverse to another client, or 2) There is a significant risk that the representation of one or more clients will be materially limited by the practitioner’s responsibilities to another client, a former client or a third person or by a personal interest of the practitioner. (b) Notwithstanding the the existence of a conflict of interest under paragraph (a) of this section, the practitioner may represent a client if: 1) The practitioner reasonably believes that the practitioner will be able to provide competent and diligent representation to each affected client; 2) The representation is not prohibited by law. 3) Each affected client gives informed consent, confirmed in writing. (c) Copies of the written consents must be retained by the practitioner for at least 36 months from the date of the conclusion of the representation of the affected clients and the written consents must be provided to any officer or employee of the Internal Revenue Service on request | |
Death&Taxes (talk|edits) said: | 21 March 2007 |
| We called it cutting the baby in half, but the basic settlement was to come up with a dollar figure and then work backwards toward it. There was no report showing disallowance of half a dependent, but the dependency was an issue. In getting to that final figure, the calculations permitted $300 for the dependency plus a certain amount of the other issue to arrive at the tax deficiency. My client would not give up the child and wanted to litigate and apparently husband felt same way.
Amazing things can happen in Appeals! | |
