Patti in Upstate NY Posted February 13 Report Share Posted February 13 I suspect I'm overthinking this but I could use some input. I have a client with two children who was divorced many years ago. As per their agreement, the children lived one week with their father and one week with their mother. Dad claimed their son and Mom claimed their daughter. Dad died in August 2023. The children continued alternating weeks, staying one with their mom and the other with their paternal grandmother through the end of the year. Can the son still be claimed as a dependent on Dad's final return? Quote Link to comment Share on other sites More sharing options...
Gail in Virginia Posted February 13 Report Share Posted February 13 If the parents agree, the exemption can be claimed on either return. So yes, as long as the mother doesn't claim the the son the father can claim him on the final return. Quote Link to comment Share on other sites More sharing options...
Sara EA Posted February 14 Report Share Posted February 14 Since the child did not live with Dad half the year, better use Form 8332, 2 Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted February 14 Report Share Posted February 14 11 hours ago, Sara EA said: Since the child did not live with Dad half the year, better use Form 8332, Not to disagree, but in the year of death, doesn't the taxpayer get "deemed" to have lived the whole year and get the credits and deductions as if they lived the whole year? I am not in a place to look this up, but my first take was the same as Gail's. I don't think the IRS is going to go looking at a decedent tax return that claims a child if no other person claims that child. Tom Longview, TX 4 Quote Link to comment Share on other sites More sharing options...
jklcpa Posted February 14 Report Share Posted February 14 I agree with Tom above, and also if this was a joint custody, then the son should be a qualifying child of the dad because the kids alternated weeks between the 2 homes and he died in August, then no one else (meaning the paternal grandfather in this case) could have had more custody than the dad unless it was possibly one week more by the mom. 3 Quote Link to comment Share on other sites More sharing options...
DANRVAN Posted February 14 Report Share Posted February 14 5 hours ago, BulldogTom said: get the credits and deductions as if they lived the whole year? If they are otherwise entitled to them, but I am not aware of any exception to the dependent rules in his favor. In this case child did not live with dad for over 1/2 year, so mom would win in a tie breaker case since child lived with her the greatest number of days. On 2/13/2024 at 4:10 AM, Patti in Upstate NY said: As per their agreement, the children lived one week with their father and one week with their mother. Dad claimed their son and Mom claimed their daughter. But in fact, only one can be the custodial parent for tax purposes in a normal 365 day year, since the child could only spend 183 nights with one parent. If one parent breaks the agreement it is a legal issue, not a tax issue. For 2023 it looks like mom is clearly the custodial parent (unless there is some special rule for the deceased taxpayer). You might be able to navigate through form 8867 in favor of deceased dad, keep in mind mother would prevail in tie breaker case. 1 Quote Link to comment Share on other sites More sharing options...
Patti in Upstate NY Posted February 14 Author Report Share Posted February 14 As always, I appreciate your input and knowledge. These clients represent the ONE AND ONLY time I did MFJ then kept both as separate clients after they divorced. It's been many years and there's never been a problem. He never mentioned her, and she never mentioned him. It's one of the most amicable divorces I've ever seen. His Mom called me last week and I will be doing his final return. The former wife comes in next week. Based on the history, I don't expect an issue but over the years I've learned that death can bring out the worst in people. Especially when money is involved and, in this case, that is true. I'm leaning towards leaving the son on Dad's return so the refund will go to the trust that was set up for the kids. Mom is now getting substantial SS benefits for both children and has a very good job so she doesn't need the money. However, if she questions me, I'll have to move the son to her return because Dad did not have him 183 days. Thank you all. 61 days left in tax season but who's counting? 1 Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted February 14 Report Share Posted February 14 2 hours ago, DANRVAN said: For 2023 it looks like mom is clearly the custodial parent (unless there is some special rule for the deceased taxpayer). I think the special rule is that the parents of the child can agree to put them on either return so long as they agree. If there is a disagreement, the tie breaker would go to the mom. I think Patti has an ethical issue on her hands about telling the mom about the situation. She cannot discuss the dad's return with the mom, but she is obligated to do so to properly inform her of the tax ramifications to the mom's return. Sticky situation. Tom Longview, TX 2 Quote Link to comment Share on other sites More sharing options...
Patti in Upstate NY Posted February 15 Author Report Share Posted February 15 Thanks, Tom. I agree with you but I think (hope) I'll be okay. I anticipate ex wife asking if I heard he died. I'll say yes and ask how the kids are doing. It should end there. If it doesn't, I'll ask her how many days he spent with each parent during 2023 and list the dependent accordingly. I don't believe I have an obligation to say "hey, I heard your ex is dead and that means you can probably claim your son." That's not my job. Or if it is? I'm out to lunch. I'm not getting involved that deeply. Quote Link to comment Share on other sites More sharing options...
Lion EA Posted February 15 Report Share Posted February 15 It's your job to advise your client how to get her lowest tax liability. But how can you advise the wife on claiming her son while also advising the husband's rep on claiming the son on the husband's final return?! I hope you have their signed conflict of interest waivers on file. 3 Quote Link to comment Share on other sites More sharing options...
Randall Posted February 15 Report Share Posted February 15 15 hours ago, Patti in Upstate NY said: These clients represent the ONE AND ONLY time I did MFJ then kept both as separate clients after they divorced. I have one of these. Divorce happened years ago and child is grown. I have not accepted anymore of these since. Only one or the other. Quote Link to comment Share on other sites More sharing options...
Randall Posted February 15 Report Share Posted February 15 15 hours ago, Patti in Upstate NY said: Thank you all. 61 days left in tax season but who's counting? I'm counting. Ha. 1 1 Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted February 15 Report Share Posted February 15 14 hours ago, Patti in Upstate NY said: That's not my job. Or if it is? I think Circular 230 says it is. Circular 230 says you cannot ignore the facts that you know when preparing a return. For example, if you know someone is married and they come to you and say they want to file HOH, you cannot ignore what you know to be a fact and file them as HOH. And I am not trying to be a jerk or a smarta$$. I am just pointing out that you are in a position that I would not want to be in. I am not sure how I would handle this. Tom Longview, TX 2 Quote Link to comment Share on other sites More sharing options...
DANRVAN Posted February 15 Report Share Posted February 15 17 hours ago, Patti in Upstate NY said: I'm leaning towards leaving the son on Dad's return On 2/13/2024 at 6:08 PM, Sara EA said: Since the child did not live with Dad half the year, better use Form 8332, Sara is correct. There is no doubt that ex is custodial parent and you are aware of that fact. But you need to confirm that with her. I suggest you meet with her first and explain that she has the option to release dependent by filing 8332. Off the top on my head, I don't see any ethical issues in this scenario. 2 Quote Link to comment Share on other sites More sharing options...
Medlin Software, Dennis Posted February 15 Report Share Posted February 15 1 hour ago, BulldogTom said: I think Circular 230 says it is. Circular 230 says you cannot ignore the facts that you know when preparing a return. For example, if you know someone is married and they come to you and say they want to file HOH, you cannot ignore what you know to be a fact and file them as HOH. And I am not trying to be a jerk or a smarta$$. I am just pointing out that you are in a position that I would not want to be in. I am not sure how I would handle this. Tom Longview, TX At this point, for me, this type if stuff (being asked to setup or detail something clearly incorrect) is the bane of my customer interactions. Starts with the "nobody will know", to "none of your business you ^&(^(&, tell me how to do what I want". I usually reply with something like "based on what you have shared, I am uncomfortable with assisting as your description does not sound like an allowable method/option/choice". The most recent is someone who wanted help with something not allowed. I was told to keep my opinions to myself and to only answer the asked questions. Rather than just firing them, I am replying with links to the documentation, with zero comments. I got a message asking for more detail, and I replied with a snip from their "shut up" message. 2 Quote Link to comment Share on other sites More sharing options...
jklcpa Posted February 15 Report Share Posted February 15 I'd prefer that this topic not be sidetracked into another gripe session until the poster's situation has been adequately discussed. It seems we already have several of those topics already going, so please stick to the subject of what the best approach and handling is, ethically, for the poster and the facts presented. Thanks. 4 1 Quote Link to comment Share on other sites More sharing options...
Patti in Upstate NY Posted February 15 Author Report Share Posted February 15 I am declining preparation of both returns. Perhaps they'll end up in one of your offices........ Thank you all for your comments/advice. 3 Quote Link to comment Share on other sites More sharing options...
Lion EA Posted February 16 Report Share Posted February 16 Yep, keep one or neither. You'll fill the spot with a conflict-free client. Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted February 16 Report Share Posted February 16 15 hours ago, Patti in Upstate NY said: I am declining preparation of both returns. Perhaps they'll end up in one of your offices........ Thank you all for your comments/advice. @Patti in Upstate NY I hope I did not scare you into dumping your clients. That was not my intent. I think how I would handle this is just have a conversation with each, explain that you have a conflict between the two, ask each what it is that they want to do, document in your engagement letter, and do the returns per their wishes if they agree. If they cannot agree, decline the engagement. I want to thank you for bringing this up. It was a very good discussion and it made me think about how I would go about it. Tom Longview, TX 3 Quote Link to comment Share on other sites More sharing options...
DANRVAN Posted February 16 Report Share Posted February 16 4 hours ago, BulldogTom said: explain that you have a conflict between the two Actually in this case there is no conflict. Mother is the custodial parent, she can either claim the dependent or release it to Dad's estate. His estate has no choice in the matter and can only claim the dependent via form 8332. 1 Quote Link to comment Share on other sites More sharing options...
Patti in Upstate NY Posted February 16 Author Report Share Posted February 16 No one scared me into dumping them and I won't be replacing them with anyone new. I've already refused about 10 prospective clients this year and I've fired four others since February 1. It's highly likely this will be my last tax season because I'm just done. There's no joy in solving the puzzles anymore. The reason I read this board every day is because there is always something to learn. There's always a warning to heed. And thank God, there's always another preparer on the verge of losing their mind and so I've felt less alone. I'm glad my asking about this fiasco returned the favor 4 1 Quote Link to comment Share on other sites More sharing options...
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