I hope you can help, my sister in law (Lisa) is a real snake! She gave her daughter (Jane) up 22 years ago to my mother in law, the child was born with many disabilities, but is now out on her own. Lisa just filed her taxes and claimed Jane as a dependent, Jane is livid because she now can not file her taxes to get her refund. Jane called Lisa, but Lisa just threatens her not to tell anyone or Jane will get in trouble. What can I (the brother in law) do to help Jane? Just remember that Jane has the mental capabilities of a 16 year old and is scared of getting in trouble.

Thanks

First you need to find a way to make jane understand that lisa is a lying snake and she should not believe her because she (jane) cannot get in trouble because her mother lied.

Are you saying that Jane is out on her own? Or do you think she is still a dependent of your mother-in-law (i.e, under 24 and a full-time student, or disabled)? If on her own, she should just file her own return and take her own exemption. The IRS will come back to Lisa for proof that Jane is her dependent, and since she won't be able to do that she (Lisa) will have some 'splaining to do.

Whether Jane is a dependent of anyone depends on whether anyone provided more than half of her support during the year. This should determine whether Lisa is lying.

Jane needs to contact the IRS and advise them of Lisa's fraudulent activities and find out how to proceed so that she can file her return and get the refund she's entitled to. It may entail something to the effect of signing an affidavit that she does not live with Lisa and that she is in fact self-supporting and not anyone else's eligible dependent. Reassure Jane that nothing Lisa can do will get her into any trouble as Jane's done nothing wrong. The one who stands to get in trouble is Lisa. Jane may have to be willing to testify that she in fact had lived with your mother-in-law for the majority of her life as I'm sure that in prior years Lisa fraudulently claimed Jane as a dependent when she in fact wasn't.

Yes, she can still file her own income tax, include a letter telling of the fruad, and send a copy of the letter to the IRS.

You and mom should also step in and "discuss" it with your sister in law.

Excellent advice all around.

If Lisa files and claims her own exemption (sending the letter explaining the situation), the IRS will then contact Jane by letter and advise her to amend her return to "unclaim" Jane.

If Jane fails to do so, then the IRS will take progressively stiffer actions, to include assesing fines and penalties and garnishing her wages to collected the unpaid taxes.

Unfortunately, jail time (though richly deserved in this case) will NOT happen.

Its interesting that this question has cropped up som much this year. I believe the issue is e-filing. What's happening is that the first return filed for a social security number is accpeted. Any other returns e-filed for the same number are rejected FOR E-FILING. But people are assuming they can't file now and that's not the case. They can still file a paper return by regular mail. When the IRS actually looks at the return (only a computer initially looks at an e-filed return) they will see there is a conflict and contact both taxpayers for a resolution.

If Jane is eligilbe for claim herself, then she should have no worries.