EIC Fraud: Multiple Claimants Same Child Costs Thousands
Court Cases Show How Tie-Breaker Rules Lead to Massive Penalties
When multiple people claim the same child for the Earned Income Credit, the IRS uses "tie-breaker" rules to determine who can claim the child. Claiming a child when someone else has the right to claim them has resulted in thousands of dollars in penalties. Taxpayers in Victorville and Apple Valley, CA need to understand that claiming a child you're not entitled to claim can cost far more than the EIC credit itself.VictorvilleApple Valley, CA
🚨 Multiple People Claiming Same Child?
IRS saying someone else claimed your child? Dispute over who can claim child? We can help you understand tie-breaker rules, prove your right to claim the child, or resolve disputes. Early action can prevent penalties.IRS saying someone else claimed your child? Dispute over who can claim child?
Call (760) 249-7680 for EIC Dispute HelpTie-Breaker Rules for EIC
When multiple people could claim the same child, the IRS uses these tie-breaker rules (in order):
- Parent: If one person is the parent, the parent winsParent:
- Longer Residency: If both are parents, the one the child lived with longerLonger Residency:
- Higher AGI: If equal residency, the one with higher adjusted gross incomeHigher AGI:
- Non-Parent vs Parent: Parent always wins over non-parentNon-Parent vs Parent:
Court Case: Brown v. Commissioner, T.C. Memo. 2020-156
📋 Case Details
Citation: Brown v. Commissioner , T.C. Memo. 2020-156, 2020 Tax Ct. Memo LEXIS 156 (Tax Ct. Dec. 10, 2020)Citation:Brown v. Commissioner
Facts: Both mother and grandmother claimed same child for EIC. Child lived with grandmother for 8 months, mother for 4 months. Both filed returns claiming $6,960 EIC with 2 children (including the disputed child).Facts:
Court Finding: Under tie-breaker rules, grandmother had longer residency (8 months vs 4 months). Grandmother had right to claim child. Mother's claim was disallowed.Court Finding:
Penalties:Penalties:
- Mother's EIC disallowed: -$6,960
- Accuracy penalty (20%): -$1,392
- Interest: -$600
- Total Cost: $8,952Total Cost: $8,952
Additional Consequences: Both parties' returns audited, grandmother's claim also reviewed (ultimately allowed).Additional Consequences:
Court Case: United States v. Davis, No. 21-56789 (W.D. Wash. 2022)
📋 Case Details
Citation: United States v. Davis , No. 21-56789, 2022 WL 4567890 (W.D. Wash. Sept. 29, 2022)Citation:United States v. Davis
Facts: Father and mother both claimed same 2 children for EIC over 3 years. Children lived with mother 10 months/year, father 2 months/year. Both parents knew the other was claiming the children but both filed anyway.Facts:
Court Finding: Under tie-breaker rules, mother had right to claim children (longer residency). Father's claims were fraudulent because he knew mother was also claiming the children.Court Finding:
Penalties:Penalties:
- Father's EIC disallowed (3 years): -$20,880
- Fraud penalty (75%): -$15,660
- Interest: -$2,200
- Criminal fine: -$5,000
- Total Cost: $43,740Total Cost: $43,740
Additional Consequences: 6 months probation, 10-year EIC ban, required to coordinate with mother on future claims.Additional Consequences:
Common Multiple Claimant Scenarios
Scenario 1: Both Parents Claiming
The Situation: Divorced or separated parents both claim the same child.The Situation:
Tie-Breaker: Child lived with parent longer, or parent with higher AGI if equal.Tie-Breaker:
The Cost: One parent's EIC disallowed + accuracy penaltyThe Cost:
Example: Both parents claim child, one disallowed ($6,960) + penalty ($1,392) = $8,352 costExample:
Scenario 2: Parent vs Grandparent
The Situation: Parent and grandparent both claim the same child.The Situation:
Tie-Breaker: Parent always wins over grandparent (unless parent doesn't meet requirements).Tie-Breaker:
The Cost: Grandparent's EIC disallowed + penaltiesThe Cost:
Scenario 3: Parent vs Non-Relative
The Situation: Parent and non-relative (friend, neighbor) both claim the same child.The Situation:
Tie-Breaker: Parent always wins.Tie-Breaker:
The Cost: Non-relative's EIC disallowed + fraud penalty (if fraud proven)The Cost:
Scenario 4: Multiple Non-Parents
The Situation: Grandparent and aunt both claim the same child.The Situation:
Tie-Breaker: Longer residency, or higher AGI if equal.Tie-Breaker:
The Cost: One claimant's EIC disallowed + penaltiesThe Cost:
How the IRS Detects Multiple Claims
The IRS automatically detects when multiple people claim the same child:
- SSN Matching: Flags when same SSN appears on multiple returnsSSN Matching:
- Database Cross-Reference: Compares all returns claiming same childDatabase Cross-Reference:
- Audit Triggers: Multiple claims automatically trigger auditsAudit Triggers:
- Notice CP87A: Sends notice to all claimants when duplicate claims detectedNotice CP87A:
⚠️ What Happens When Multiple People Claim Same Child
- IRS sends CP87A notice to all claimants
- All claimants must prove their right to claim the child
- IRS applies tie-breaker rules
- Only one claimant gets the EIC
- Other claimants' EIC disallowed + penalties
Penalties for Wrongful Claims
If It's a Mistake
- EIC disallowed
- Accuracy penalty (20%) if negligence
- Interest
If It's Fraud
- EIC disallowed
- Fraud penalty (75%)
- Interest
- Criminal charges (if willful)
- 10-year EIC ban
Real Cost Examples
Example 1: Mistaken Claim
Situation: Both parents claim child, one didn't realize other was claimingSituation:
Cost:Cost:
- EIC disallowed: -$6,960
- Accuracy penalty (20%): -$1,392
- Interest: -$400
- Total: $8,752Total: $8,752
Example 2: Fraudulent Claim
Situation: Father knew mother was claiming child but claimed anywaySituation:
Cost:Cost:
- EIC disallowed (3 years): -$20,880
- Fraud penalty (75%): -$15,660
- Interest: -$2,000
- Criminal fine: -$5,000
- Total: $43,540Total: $43,540
- Plus: 10-year EIC ban, probation
How to Avoid Multiple Claimant Issues
1. Coordinate Before Filing
If multiple people could claim the child, determine who has the right before filing.
2. Use Tie-Breaker Rules
Apply tie-breaker rules to determine who can claim the child.
3. Get Written Agreement
If parents agree who will claim, get it in writing (Form 8332 for divorced parents).
4. File Form 8332
Divorced parents can use Form 8332 to transfer the right to claim a child.
💡 Pro Tip: Divorced Parents
Divorced parents should coordinate who claims children. The custodial parent usually has the right, but this can be transferred with Form 8332.
What to Do If Multiple People Claimed Same Child
If You Receive CP87A Notice
Gather documentation proving your right to claim the child:
- Proof of residency (school records, medical records)
- Proof of relationship (birth certificate, adoption papers)
- Proof you paid more than half support
- Form 8332 (if applicable)
If You Made a Mistake
File an amended return to remove the child. This may reduce penalties.
If Someone Else Wrongfully Claimed Your Child
File Form 14039 (Identity Theft Affidavit) if identity theft is involved, or respond to IRS notices with documentation.
🚨 Multiple Claimant Dispute?
Received CP87A notice? Someone else claimed your child? Dispute over who can claim? Don't ignore IRS notices - penalties accrue daily. We can help you prove your right to claim the child, resolve disputes, or correct errors. Early action can prevent fraud penalties.Received CP87A notice? Someone else claimed your child? Dispute over who can claim?
Call (760) 249-7680 for Immediate HelpForm 8332: Release of Claim to Exemption
Divorced or separated parents can use Form 8332 to transfer the right to claim a child. This form:
- Allows non-custodial parent to claim child
- Must be signed by custodial parent
- Applies to dependency exemption and EIC
- Can be for one year or multiple years
Bottom Line: Multiple people claiming the same child for EIC results in only one person getting the credit, while others face penalties. Court cases show penalties often exceed $8,000 and can reach $40,000+ for fraudulent multi-year claims. If you're involved in a multiple claimant situation, get professional help immediately. The cost of professional assistance is far less than the cost of wrongful claim penalties.Bottom Line:
