Got a letter from the IRS about dependent care expenses

[secondimpression]

XH and I are not divorced yet (finally have a court date coming up for the limited divorce) so for the 2010 tax year I had to file as married filing seperately. I did it through a software program since my taxes are relatively simple and the program put in my dependent care expenses and calculated a refund. There is no CS, XH didn't pay a single dime towards anything, I take the child tax credit and I used a state liscensed daycare provider and we lived apart all of 2010. Everything was kosher there, no weirdness. Then I get a letter from the IRS adjusting my refund because they say my filing status doesn't allow me to claim ANY dependent care expenses. The letter also said that for me to claim those expenses, I would have had to file a joint return or be 100% absolutely divorced and file single or HOH. That was it, nothing else about anything, just strictly that dependent care expenses are not allowed for my filing status.

What????

Has this happened to anyone else? I'm FUMING mad and hoping for some more experiences before I go spouting off an angry letter to the company whose software I paid to use that garunteed me an extra $900 

[zebra15]

http://www.irs.gov/newsroom/article/0,,id=106189,00.html 

Read #5....

[ssh]

If you've been living separately from your XH and have separate household expenses and you've contributed over half of your children's support you can file head of household. It doesn't matter if you are divorced or not.

[Phoenix~Mama]

What ssh said.  With turbo tax you can actually file as separated and head of household, which is what I did.

[sunflowers]

I thought only one spouse could claim HOH- whether living together or seperately.

[secondimpression]

Originally Posted by Phoenix~Mama 

What ssh said.  With turbo tax you can actually file as separated and head of household, which is what I did.

I'm not legally separated per my state's definition so it forced me into married filing separately. Which still makes no sense why it let me claim the expenses then I lost it on the IRS's end. I searched around a little bit and am finding that yes, I probably could file HOH, so I'm playing with that right now and seeing what went wrong. Either way, I'm still pretty mad to be having to do this at all. I mean, I paid hard earned money to have software make sure everything was done right and the IRS says it wasn't. Not cool TurboTax

[secondimpression]

Grrr...this was a much bigger headache than it needed to be. The mistake was mine but because of the way TurboTax was set up, it was impossibly easy for me to completely miss that I could indeed file as HOH, I actually had to search around for where to over-ride them! Ultimately, I had to amend both my federal and state returns and am praying I did the state form correctly, neither were exactly easy to do. On the plus side, I should hopefully get a bigger refund now with a few credits I didn't previously qualify for. Just hoping that in the "8-20 weeks" it takes to process the amended returns, everything goes through smoothly.

Thanks ladies, you're always a huge help!

[moonfirefaery]

Originally Posted by secondimpression 

Grrr...this was a much bigger headache than it needed to be. The mistake was mine but because of the way TurboTax was set up, it was impossibly easy for me to completely miss that I could indeed file as HOH, I actually had to search around for where to over-ride them! Ultimately, I had to amend both my federal and state returns and am praying I did the state form correctly, neither were exactly easy to do. On the plus side, I should hopefully get a bigger refund now with a few credits I didn't previously qualify for. Just hoping that in the "8-20 weeks" it takes to process the amended returns, everything goes through smoothly.

Thanks ladies, you're always a huge help!

You should wind up with a LOT more filing HOH. I file HOH and get myself a nice present from the IRS every spring. :) I'm not legally seperated, but we haven't lived together in over two years, so I'm the HOH! :)

[secondimpression]

Originally Posted by moonfirefaery 

You should wind up with a LOT more filing HOH. I file HOH and get myself a nice present from the IRS every spring. :) I'm not legally seperated, but we haven't lived together in over two years, so I'm the HOH! :)

The amended amount was about triple the original amount (and I guess 6x what I actually got refunded). But with the way my luck has run in the last 2 years, I'm not even counting those pennies until they show up in my bank account!

[moonfirefaery]

Originally Posted by secondimpression 

The amended amount was about triple the original amount (and I guess 6x what I actually got refunded). But with the way my luck has run in the last 2 years, I'm not even counting those pennies until they show up in my bank account!

They will. HOH is basically the filing status for single parents. I couldn't believe the numbers TurboTax showed me, but it showed up in the bank all right.

[Goodmom2008]

In 2010, how long have you been separated?  If it was more than 6 months, you can refile and file HOH.  If it is less than 6 months, then there's nothing you can do other than amend your filing to be joint. 

[Goodmom2008]

Originally Posted by ssh 

If you've been living separately from your XH and have separate household expenses and you've contributed over half of your children's support you can file head of household. It doesn't matter if you are divorced or not.

In order to claim the HOH status, the child must LIVE with you for over 50% (and the IRS goes by overnights only) of the tax year.  It doesn't matter who contributes more financial support. 

This is also the same for claiming the child on your taxes.  If the child lives with the parent for over 50% of the tax year, that parent also gets the exemption and EIC for the child(ren).  The child tax credit follows the child.  Now, if the custodial parent signs a form 8332 releasing the exemptiong to the other parent, then the other parent can claim the exemption and the child tax credit.  But not HOH and not the EIC, those strictly go to the custodial parent.  It doesn't matter if the NCPprovides more than 50% of the financial support.  The CP would still be able to claim HOH even if not claiming any child. 

[Goodmom2008]

Originally Posted by secondimpression 

I'm not legally separated per my state's definition so it forced me into married filing separately. Which still makes no sense why it let me claim the expenses then I lost it on the IRS's end. I searched around a little bit and am finding that yes, I probably could file HOH, so I'm playing with that right now and seeing what went wrong. Either way, I'm still pretty mad to be having to do this at all. I mean, I paid hard earned money to have software make sure everything was done right and the IRS says it wasn't. Not cool TurboTax

The IRS doesn't go by the state law, they go by federal law.  If you can prove that you were living apart for more than 6 months in 2010 (separate addresses will help tremendously with this), you can file HOH. 

[Super~Single~Mama]

Originally Posted by Goodmom2008 

In order to claim the HOH status, the child must LIVE with you for over 50% (and the IRS goes by overnights only) of the tax year.  It doesn't matter who contributes more financial support. 

This is also the same for claiming the child on your taxes.  If the child lives with the parent for over 50% of the tax year, that parent also gets the exemption and EIC for the child(ren).  The child tax credit follows the child.  Now, if the custodial parent signs a form 8332 releasing the exemptiong to the other parent, then the other parent can claim the exemption and the child tax credit.  But not HOH and not the EIC, those strictly go to the custodial parent.  It doesn't matter if the NCPprovides more than 50% of the financial support.  The CP would still be able to claim HOH even if not claiming any child. 

Wait, so this means that I don't have to let my ex claim DS every other year???  Really??  That is SO amazing!!!! 

[Goodmom2008]

Originally Posted by Super~Single~Mama 

Wait, so this means that I don't have to let my ex claim DS every other year???  Really??  That is SO amazing!!!! 

Technically, if your child lives with you most of the year, you get to claim the child each year unless you release the exemption.  The IRS isn't in the business of enforcing a state court order.  They go by their regulations.  There was once a poster on another board whose judge ordered a divorcing couple  to file jointly for 2009.  And ordered the divorce in 12/2009.  Guess who can't file jointly? 

This doesn't mean that you won't be in contempt of a state court if the court order states that the exemption for the child(ren) is to be split.  Or alternated.  But you won't get into trouble with the IRS for doing so.  And in the abscence of a state court order, you won't be in contempt, either.   
 

Edited by Goodmom2008 - 4/4/11 at 3:50am