Many teens wonder ‘what to do if my parents claimed me on their taxes,’ and ‘do I lose money?’ If your parents claimed you on their taxes, you should talk to them before you do anything. You could potentially lose money. However, if your parents pay for more than 50 percent of your living and housing expenses, it may be more beneficial for them to claim you as a dependent.
Even if your parents claim you, you still have to file a tax return if your earnings are high enough. If you support yourself and cannot talk it out with your parents, there are some steps you can take to recover any money you lost due to your parents claiming you.
To learn more, read this guide. It contains essential information about your obligation to file a tax return and steps you can take if someone files a false tax return claiming you as a dependent.
What to Do If Your Parents Claimed You on Their Taxes
You may still have to file a tax return even if your parents claim you. Each year, the IRS sets requirements for taxpayers. You must file a return if you make more than the threshold. Currently, the limit is $12,950.
So, even if your guardians claim you, you still have to file if you make more than that amount. As an employee, you can still file a return if you make less than $12,950, and if you are a teen and taxes were taken out of the checks, you may be entitled to a refund even if you make less if no one else can legally claim you.
However, you are asked when you file if anyone else will claim you as a dependent. If your parents are claiming you, you should select ‘yes.’ If you are unsure if your parents will claim you as a dependent, you should talk to them before answering this question. Selecting ‘no’ when your parents claim you will send a red flag to the IRS.
When Can Your Parents Legally Claim You?
There are rules for claiming someone as a dependent. For your parents to claim you and receive associated tax deductions, you must pass the qualifying child test or:
- You must be younger than 19 or younger than 24 and enrolled as a full-time college student.
- Your parent must provide more than 50 percent of the dependent’s financial support, housing, food, etc.
- You may not be married or file a joint tax return with another person.
If you are permanently disabled, unable to work, unmarried, and your parent supports you financially, there is no age limit or timeframe for which your parent can claim you.
Do You Lose Money If Your Parent Claims You?
You can lose money if your parents claim you. You will not qualify for a tax refund or stimulus payments if your parent claims you. However, if your parent supports you financially, it may be more beneficial for them to claim you, and they have the right to if you meet the qualifying child-dependent test.
What Should You Do If Someone Claims You Illegally?
If you live on your own and someone cannot claim you legally, you need to answer ‘no’ when asked if someone else can claim you when you file your taxes.
If someone else claims you, the IRS will send a CP87A letter to you and the person who claims you requesting that you correct your returns or provide supporting documentation as to why or why not the other person has the legal right to claim you.
The IRS may request that you provide proof that you support yourself. Some of the documentation the IRS may request includes:
- Debit card statements or proof of payments for rent, housing, or utilities
- Proof of residency
- School records
- Birth certificate
After you provide proof that no one else can claim you, the IRS will initiate an audit of one or both parties to determine whose return is lawful. If the IRS determines the other party unlawfully claimed you, they must amend their return.
Final Advice On Your Parents Claiming You On Their Taxes
If your parents claimed you on their taxes, you should still file a return if you make more than $12,950. You just need to select ‘yes’ when asked if someone else can claim you. You may lose some money. However, it may be more beneficial for your parents to claim you.
However, if your parents are not supporting you, you need to answer ‘no’ when asked if someone else can claim you. Then, respond to the IRS if you receive a letter with the information they request.
If you are unsure of whether your parents will or can claim you, it is best to have a conversation with them. It is typically better to talk it out with your parents than to go through an IRS audit.