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Tax Prep by Deb

I think I goofed! Just need confirmation

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I had a client come into my office this year with a situation that I felt qualified her to file head of household. The State of California has disagreed and while I thought they were wrong, the more I look at the exact wording they probably are right. I just need some confirmation for you all!

The client was married as of the end of 2009, though she and her husband had separated and filed for divorce in January of 2009. She moved out on February 2009 and moved in with her brother taking over his lease as was not working and was about to be evicted. She supported him and maintained their home from February thru December. On the surface it looked like she should qualify as she and her husband did not live together for the last six months of 2009. California is stating she does not qualify because she did not have a child to claim, her qualifying relative was her brother.

I missed the simple statement that to be considered unmarried the qualifying person had to be her child or stepchild or fosterchild. Is that how you understand it? Did I goof?

Thanks,

Deb!

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>>The State of California has disagreed<<

California started auditing 100% of HoH returns (over a three-year cycle) when it disagreed with the IRS about the definition of foster child. The federal law has since adopted California's interpretation, but the state continues the letter audits because it thinks quite a few taxpayers "borrow children" for tax purposes. The program has been financially successful, as you are finding out. (Now the main difference in filing status rules involves registered domestic partners.)

California will also tell the IRS about your mistake, so you might as well stay ahead of the game by amending the federal return too. Unless the brother is permanently disabled, he is not a qualifying child for "considered unmarried."

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Thanks to both of you. I intend to ammend the Federal to change the filing status. My biggest goof was paying to much to their stupid charts and not enough to the wording. What got me was the married but considered unmarried part. I just didn't see that. Oh well, thats how I learn, but I'd much rather learn through reading, not by error.

Deb!

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I've found this to be a helpful link in the past.

http://www.ftb.ca.gov/individuals/hoh/selftest/Index.shtml

I found it also in researching this problem. The problem is finding it too late! Thanks for the heads up thought. I've used the EIC test on the IRS website often and last year it meant a huge refund for one of my clients. So I guess you win some and lose some. At least my client is understanding and doesn't seem to upset over it.

Deb!

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