Penalties for IRS Dependent Fraud
- Learn the penalties for dependent fraudtax forms image by Chad McDermott from Fotolia.com
According to the Internal Revenue Service (IRS), a dependent is defined as an individual you are materially supporting. This is frequently a child, a step-child, a grandchild or other relative. Since supporting a dependent qualifies you for certain benefits, the IRS is strict in its definition of a dependent. There are harsh penalties for fraudulently claiming a dependent. - An individual cannot be claimed as a dependent by two different people. This means that both parents cannot claim the same child as a dependent. If you claim a child as a dependent, that child must live with you for more than half the year. To claim a dependent relative, you must provide more than half the support that individual requires. Support can be defined as providing food, clothing, health care or educational payments.
If you knowingly claim a nondependent individual as a dependent, you will receive strict penalties from the IRS. If the IRS can prove that you have claimed too many dependents or knowingly claimed a nondependent, you might even be charged with perjury. - In addition to being charged with perjury, you will likely face fines for your mistake. The fines range from relatively small amounts to $225,000. You may also be responsible for the court's prosecution costs and face up to three years in prison.
- If your fraud is discovered years after you file your taxes, you may be subject to paying back taxes and subsequent interest in addition to other penalties and fines. You may also be required to pay back the money that you received as a deduction.
