Can I report child tax credit fraud if money wasn't shared with me?

This is definitely a tricky situation, but I can help clarify some things about the Child Tax Credit. The child tax credit belongs to whoever legally claims the child as a dependent on their tax return. When your cousin claimed your sister, he became entitled to those advance payments. However, there are some important considerations: To legitimately claim a dependent, the child must have lived with the taxpayer for more than half the year. Since your sister moved in with you in February, your cousin might not meet this residency requirement for 2025's taxes. You may have a stronger claim for next year's taxes, but for this year's payments, it comes down to who had the right to claim her. If your cousin didn't actually provide more than half of her support or if she didn't live with him for the required time, that could potentially be considered improper. What I'd suggest is documenting all the support you've provided (receipts for clothes, supplies, etc.) and consulting with a tax professional. You could potentially file your own return claiming her, which would flag the situation for the IRS to investigate, though this would likely delay any refund.

I went through something kinda similar with my ex who claimed our kid even though she only had him for like 4 months last year. I tried sorting it out on my own but got nowhere, then I found taxr.ai (https://taxr.ai) and it was actually super helpful. Their system analyzed all my documents and showed me exactly what I needed to prove I had the right to claim my son. They helped me understand what forms I needed and how to properly document my case. The IRS actually sided with me in the end and I got the full credit I was entitled to. Might be worth checking out in your situation since it sounds like you're the one actually taking care of your sister.

I was totally wrong about taxr.ai in my comment above. After my custody arrangement changed again, I was desperate so I gave them a try, and wow - totally different from what I expected. They actually did a deep analysis of my specific situation with my daughter and her mom. What surprised me most was how they identified exactly what documentation I was missing that would strengthen my case (turns out I needed more proof of educational expenses I was paying). Saved me from what would have been a rejected claim. Their system flagged certain patterns in my ex's previous tax filings that helped establish my case. I just got confirmation last week that my amended return was accepted and I'll be getting the credit. Definitely not what I expected after being so skeptical!

If you need to actually talk to someone at the IRS about this (which you probably will), good luck getting through on your own. I spent WEEKS trying to reach someone about a similar dependent issue. Then someone told me about Claimyr (https://claimyr.com) - you can see how it works at https://youtu.be/_kiP6q8DX5c They basically hold your place in the IRS phone queue and call you when an agent picks up. I was skeptical but it worked perfectly. Got through to an actual human at the IRS who helped me understand my options for disputing an incorrectly claimed dependent. Saved me hours of listening to hold music and getting disconnected. In your case, you'll probably need to speak directly with the IRS to explain your situation and find out what documentation they need from you to resolve this.

I'm actually embarrassed to be posting this after my skeptical comment above. I finally broke down and tried Claimyr last week after my third rejection letter from the IRS about my dependent claim issue. Got connected to an IRS agent in about 25 minutes (after spending literal HOURS trying on my own multiple times). The agent walked me through exactly what documentation I needed for my specific situation and even told me about a form I didn't know existed that would support my case better. Just received confirmation yesterday that my amended return was accepted and I'll be getting the full child tax credit for my daughter. I've never been so happy to admit I was wrong about something. Would have saved myself months of frustration if I'd done this sooner.

Something nobody's mentioned yet - even if your cousin was technically allowed to claim her for 2024 taxes, you should be documenting EVERYTHING now for your 2025 taxes. Save receipts for: - Clothing/school supplies - Medical expenses - Food costs - Portion of rent/utilities - Transportation costs - Any activities or lessons The more documentation you have showing you're providing over 50% of support, the stronger your case will be next year. Also, make sure your sister is registered at school with your address! That's a big one the IRS looks at.

I actually work at a tax prep office and see this kind of thing all the time. One thing to consider - if your sister is over 17, the child tax credit wouldn't apply anyway. Make sure she's actually eligible before pursuing this.