Form 14039 is typically used when someone steals your identity to extract a fraudulent refund. Generally when two people claim the same child on a return, the IRS presumes the first filer has custody and sends a notice to the second filer "correcting" the number of dependents. Most of the time, they send a form titled "CP2000" to make this correction.
You can rebut the changes suggested by the IRS by proving that the children were legally your dependents. To prove dependency, you must satisfy 5 tests:
1. The child must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them.
2. The child must be (a) under age 19 at the end of the year and younger than you (or your spouse if filing jointly), (b) under age 24 at the end of the year, a student, and younger than you (or your spouse if filing jointly), or (c) any age if permanently and totally disabled.
3. The child must have lived with you for more than half of the year.
4. The child must not have provided more than half of his or her own support for the year.
5. The child is not filing a joint return for the year (unless that joint return is filed only to claim a refund of withheld income tax or estimated tax paid).
You can read more about these issues in IRS Publication 501, linked below. The relevant section starts on page 11. Please consider speaking with an experienced tax professional to ensure the best possible result, particularly by gathering the correct evidence.
Robert Hoffman is a tax attorney licensed in California. The information presented here is general in nature and is not intended as a substitute for legal advice. This posting does not create any attorney-client relationship with the author. For competent advice about your particular situation, consult your own attorney.