Do they have an appropriate 8332 on file? This form is often necessary in order to create or change the ability for the noncustodial parent (whichever parent that is) to claim a child on a tax return. http://www.irs.gov/pub/irs-pdf/f8332.pdf
THESE COMMENTS ARE NOT LEGAL ADVICE. They are provided for informational purposes only. Actual legal advice can only be provided after consultation by an attorney licensed in your jurisdiction. The answer to question does not create an attorney-client relationship or otherwise require further consultation. Mrs. Cook is licensed to practice law throughout the state of California with offices in San Diego County. She is authorized to handle IRS matters throughout the United States, and is also licensed to practice before the United States Tax Court. IRS CIRCULAR 230 DISCLOSURE: To ensure compliance with requirements imposed by the IRS, please be advised that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used or relied upon, and cannot be used or relied upon, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
Most likely not. Even if she's not entitled to claim the child as a dependent, if she does so the IRS will simply deny the claim and assess additional tax, plus penalties and interest against her. Tax fraud requires some act intended to disguise the illegal behavior or mislead the IRS, and simply claiming a dependent deduction you're not entitled to is not really that sort of conduct.
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No this is not tax fraud. This is sound tax planning. The parents may agree in writing who may claim the exemption for a child. Accordingly, it is in the best interest of a family to evaluate where to assign the exemption to maximize family finances. Unless the value of the deduction to you is worth more than the $2000.00 the mother is willing to pay you may be inclined to take her up on the offer.
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This is legal. The husband is foregoing the tax deduction and allowing his wife to use it. As long as the child is living in their home for the required period of time during the year, there is nothing wrong with this.
If the Court Order says this year is your husband's year to claim his daughter and her mother does to help the new husband; that is Contempt of Court. She faces not only having to amend her joint return with her new husband, owing your husband what he should have gotten from claiming his daughter,and paying your husband's attorney's fees for the cost of his enforcing the Order. As I am often in Court have your husband call my assistant Dan London at 312-807-3990 to set up a private telephone consultation. At the consultation we can discuss the confidential details we need to craft a strategic plan. These details should not be broadcast over the Internet.
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