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My Ex Claimed My Child as a Dependent; Now What?

You can’t divide a dependent exemption in half.

So, your ex claimed your child as a dependent on their tax return, when you were the only parent eligible to do this. Was it out of revenge? Maybe it was just miscommunication? Perhaps they believed they were actually allowed to? It happens. Regardless of the reason they did it, now you need to fix it and prevent this from happening in the future. RapidTax is here to help.

What will happen if I e-file my tax return?

You are the custodial parent of your child. Are you sure? To avoid confusion with the tax jargon I just threw your way, a custodial parent (for tax purposes, anyways) is the parent who the child lives with for the majority of nights per year. If both parents spent an equal amount of time with the child, then the parent with the highest adjusted gross income is the custodial parent (by default), according to the IRS. Keep in mind that determining who the custodial parent is does not depend on a state or county court ruling. For tax purposes, the IRS only considers federal law.

If both you and your ex e-file your tax returns and claim your child as a dependent, the one of you who filed second will be rejected by the IRS. This is inevitable. Even if you are the custodial parent, the IRS e-file system is a machine and you will still need to prove this.

What steps do I need to take to prove that I am the eligible parent?

The first thing to understand is that each tax situation is unique, and the best thing to do is contact the IRS directly for specific instructions on how to proceed. However, if you want a general idea of the steps you’ll need to take, keep reading.

Step #1: Double check that you meet all of the eligibility requirements set up by the IRS. This is important because if you do not meet even one of the following and your ex does, it could work against you. These requirements are: Continue reading “My Ex Claimed My Child as a Dependent; Now What?”

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What to do with a 1095-A, 1095-B and 1095-C

An apple a day keeps the doctor away…just not from your paychecks.

There are new tax forms that you should keep your eyes peeled for this year. These are the 1095-A, 1095-B and 1095-C. No need to panic. These forms are mainly for your reference and can be stowed away with the rest of your tax documents until you’re ready to file a tax return for the year. So why are they making a debut in a mailbox near you? Let’s take a look at what they are and how to handle them.

What is each form?

A 1095-A is your Health Insurance Marketplace statement. This provides you with the annual information about your health coverage if you or someone in your family was enrolled in coverage through the Health Insurance Marketplace.

A 1095-B is your Health Coverage statement. This shows you the yearly information about your health care coverage if you, your spouse or your dependents were enrolled in coverage through an insurance provider or self-insured employer.

A 1095-C is your Employer-Provided Health Insurance Offer & Coverage statement. This form will provide you with the yearly coverage offered to you through your employer.

Which form will I get?

You’ll receive a 1095-A if you, your spouse or your dependent(s) were enrolled in health coverage for the year through the Marketplace.

A 1095-B will be coming your way if you and/or your family members received insurance through a health insurance provider. Health insurance providers consist of insurance companies, certain self-insured employers and government agencies that run Medicaid, Medicare or the Children’s Health Insurance Program (CHIP). Continue reading “What to do with a 1095-A, 1095-B and 1095-C”

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2015 IRS Late Tax Penalties

Failure to file or failure to pay; is there a lesser of two evils?

There are two IRS tax penalties that you put yourself in jeopardy of paying when you don’t file your tax return on time.

  1. Failure-to-File Tax Penalty. This applies to you if you did not file your tax return by the tax filing deadline and owed tax to the IRS.
  2. Failure-to-Pay Tax Penalty. This applies to you if you filed your tax return but did not pay your entire tax liability due by the tax filing deadline.

If you are expecting a refund, you will never be held liable for a penalty fee.

How do I calculate my failure-to-file tax penalty?

The late filing penalty is 5% of the additional taxes owed amount for every month or fraction of a month that your return is late. This is capped at 25%. Let’s take a look at an example.

Let’s say you owe the IRS $950. One September morning, you wake up and it hits you. You forgot to file your 2015 tax return! You can assume that you will owe the IRS an additional $240. Here’s the math:

$950 tax liability x 5% = $47.50 per month late Continue reading “2015 IRS Late Tax Penalties”