I e-filed my tax return and it was denied by the IRS. The reason given is that my ex-spouse claimed the earned income credit on his child. I am the custodial parent and the child lives with me almost the entire year. What can I do?

ANSWER

The BIDaWIZ Team's Answer:

The custodial parent generally will need to sign form 8332 to allow the noncustodial parent to claim the exemption for the child. Unfortunately, noncustodial parents may e-file their tax return before the custodial parent and inappropriately claim the earned income credit. As such, the custodial parent's tax return will be rejected because the noncustodial parent already claimed the credit for that child. If this occurs, the custodial parent will need to file a paper tax return to process the earned income credit and their return. The IRS will then note that two parents claimed the earned income credit for the same child and will investigate the issue. The IRS will request supporting documentation from both parents. The custodial parent will likely be granted the credit and the other parent will lose their claim and potentially face interest and penalties. This is referenced in IRS Publication 596 and IRC Section 32.