IRS Notice of Defiency... PLEASE HELP!?

Let me guess. Your boyfriend claimed Head of Household filing status and claimed the 2 girls as qualifying children. That meant he claimed a larger standard deduction, exemptions, 2 child tax credits, child care (they are 1 and 2) and EIC.

This is a huge red flag to the IRS (and should be).

Your boyfriend would be asked to prove the following (note, 80% if their support is NOT one of the tests).

1. That he lived with the children for more than half the year. This requires something, be it addresses at child care, doctors, social workers, copies of his lease, affidavits from neighbors and/or landlord.

2. That the children did not support themselves. If the children get section 8 housing, food stamps or other kinds of welfare, your boyfriend has to show it was less than half of their total support (which is actually different than saying he provided it). Unfortunately, showing this requires showing the total support and if you can't prove anything, you lose.

3. That he is in fact the brother of one of their parents.

4. If the parent(s) lived with him, he has to show that his income is higher than each of theirs.

5. To claim HOH, he had to prove the above *and* show that he paid more than half the cost of keeping up the home. (This is where support comes in.)

Where exactly did the mother live? Did she have any income?

"Maternal Nieces" that is almost a nonsense phrase. If these are the children of your boyfriend's sister, say so.

Edit:

1. Since the mother did not work and had $0 income, did your brother claim her as well? Clearly with no income and she's living in his house, he should be able to show he supported her as well. (The value of the housing is divided by the number of people living there.)

2. If the children and 1 and 2, who claimd the mother and child on their taxes last year?

Dear LH: You are on the right track - don't panic.

The IRS is way behind and check the date on the letter. You should be OK if the supporting docs support your claim. Letters to the IRS cross in the mail all the time and it will work it way out. For $4100 you may want to enlist the help of an expert. For not much money they could attempt to resolve this issue for you.

Are the nieces living with you full time? Is your address on their medical records? Did their parents file a tax return for the year in question? (09) Can you document support or actually can you document the kids did not provide 50% of their own support? All important issues.

This advice was prepared based on our understanding of the tax law in effect at the time it was written as it applies to the facts that you provided. Click on my profile to read more. Errol Quinn Enrolled Agent.

Allowed? Of course, they are the IRS.

What your bf needed to do is to (1) get the name & number of the IRS agent to whom he was speaking and (2) then follow up with them or that department every time.

A notice of deficiency isn't final -- you still have time to document & appeal.

they have to have lived in his household at least 6 months of the year, and he provides more than 50% of their support

apparently they do not live with him therefore regardless of how much he supports them he cannot claim them, they are not his own children