Who is knowledgeable on taxes?

[Darnell 8,479]

I agree... I wish his parents had told us.. It was his first time to do this! Makes me so upset, especially if we have to chose who amends then it will have to be us because we won't have a choice I kind of wish the answer was more clear cut

Ya, for me, I found out when I was applying for federal aid a million years ago at a uni. I thought I was an independent student, past the age (laws changed since then) but when the financial aid officer reviewed my parents return, they had claimed me, saved 304 in tax.

That was the year I dropped out of school, set up my first business, and never looked back. Snuck in 3 degrees since then, but that first year was really strange.

So, his parents should amend their return. They'll pay a bit , but that's ok - should be less than 1K. If you two were married in that same year, suggest he rework a tax return, see if things 'make sense' (larger refund amount) for the two of you to file an amended return as well (married filing jointly).

Edited November 7, 2011 by Darnell

[rin and john 71]

So, his parents should amend their return. They'll pay a bit , but that's ok - should be less than 1K. If you two were married in that same year, suggest he rework a tax return, see if things 'make sense' (larger refund amount) for the two of you to file an amended return as well (married filing jointly).

They married April 2011, so for 2010 he was single.

If his parent's modify their return, they will probably owe another $1,000 or so (depending on their income/tax bracket) as you say. If he modifies, he would probably owe substantially less. As I recommended before, he should work with his parents on doing whatever results in the least amount going to the IRS (i.e. if they would owe $1,000 and he would owe $200 perhaps his parents would agree to have him modify and foot the $200 bill as it would save them $800). Of course, the letter was to him and not his parents. The IRS most likely pursued him as his parents filed first.

[Messybrownhair 251]

His dad earned less than 40k for 5the people (including my hubby) and tim earned 20k for one person.. who do you think would pay less back? His parents filed before us. The cpa said if my hubby did it he would pay 1000 back.. not sure bout his parents..

[Usui Takumi 1,562]

His dad earned less than 40k for 5the people (including my hubby) and tim earned 20k for one person.. who do you think would pay less back? His parents filed before us. The cpa said if my hubby did it he would pay 1000 back.. not sure bout his parents..

Making less than 40k with that many dependents means he likely had no fed tax liability. Reducing one dependent probably won't change that.

[rin and john 71]

His dad earned less than 40k for 5the people (including my hubby) and tim earned 20k for one person.. who do you think would pay less back? His parents filed before us. The cpa said if my hubby did it he would pay 1000 back.. not sure bout his parents..

Without details, can only do a "simplified" comparison:

Dad (assuming married filing jointly)

Income: $40K

Std Ded: $11,6K

Exemptions: 5 x $3,700 = $18.5K

Taxable income = $9.9K

Tax on $9.9K (for MFJ)= $998

If exemptions reduced to 4;

Exemptions: 4 x $3,700 = $14.8K

Taxable income = $13.6K

Tax on $13.6K = $1,378K

So Dad would owe IRS an extra $380 if your husband claimed himself. Changing the income above to $35K with a taxable income closer to $5K for 5 dependents and $8.7K for 4 dependents only changes the extra owed from $380 to $370.

Husband (filing single):

Income: $20K

Std Ded: $5.8K

Exemptions: 1 x $3,700 = $3.7K

Taxable income = $10.5K

Tax on $10.5K (for Single)= $1,153

If exemption reduced to 0;

Exemptions: 0 x $3,700 = $0

Taxable income = $14.2K

Tax on $14.2K = $1,708

So your husband would owe $555 if he modified his return to zero exemptions.

However, this is SIMPLIFIED. Other items like whether they itemized or used standard deductions, school tuition credits, american opportunity credit, etc would change the calculations. The best thing to do is calculate it both ways (as suggested before). In all likelihood, Dad changing his return would cost less.

[Messybrownhair 251]

Thank you so much!!!! We will talk to his parents today and hopefully they will agree to amend. ^.^

[Dakine10 5,452]

Your husband has a very simple return. Did he use http://turbotax.com

I can't recommend it enough. They know all the loopholes and credits that exist. It takes 5 minutes to fill out.

I was expecting a return of maybe a few hundred bucks and I ended up getting around $1400

I hope you didn't forget the capital gains from your iPads.