2.) Don’t Claim Your Friend’s Brother’s Sister’s Boyfriend’s Sister’s Kids
We’ve all seen it. Every year someone’s “selling” their children’s information for a cut of your refund because they don’t work and aren’t able to file a return themselves. It’s all fine and dandy if you can get away with claiming your “cousin” on your tax return, but what if you don’t get away with it, which is a huge possibility.
Take this example: You meet a girl at Applebee’s and she doesn’t work and have two kids that she wants you to claim on your return. In exchange, she wants you to give her half of your refund. You’re cool with it because you really like this girl a lot and your refund is now $8,000 when it would’ve been $1,000 without the kids, so that’s a profit of $3,000 after you and her split the final refund.
You list those kids as “sons” on your return because there’s no option to list them as a “cousin” or “girlfriend’s kids”, or “like a son to me”, so you figure that “son” is the best option and you ride with it. Your return actually goes through and now you’re $4,000 richer. The only downside is that soon after, your girlfriend leaves you.
Now what you didn’t know is that your girlfriend ran the same tax scheme with two suckers she met at Chipotle, another one at Ruby Tuesday, and five that she met at Golden Corrall, and an IRS audit is on its way real SOON.
Now of course, this is an extreme example, but you get my point. When the IRS audits you for claiming your “sons” on your return and you obviously have no proof to prove the kids are yours, guess who will be paying back the money. That’s right! You guessed it. You will have to pay back the $7,000 plus penalty and interest. And considering that you only received $4,000 of it in the first place, it really isn’t worth it to now be essentially in a $11,000 hole because you can’t get the $4,000 back from your now ex-girlfriend. You can’t take her to court to get back your money. Judge Judy or whatever judger you’re in front of will just laugh at you. You can’t sue someone over a fraudulent act that you both participated in willingly.
And someone cannot just transfer a credit to you by not claiming it. You are either entitled to use the credit or you are not. The fact that your girlfriend or whoever didn’t claim an exemption she is entitled to does not mean that you can use it.
There’s a reason why there’s no “cousin”, “girlfriend’s kid”, or “like a kid to me” option on your tax return for you to use, and that’s because you can’t claim them, so don’t!
