What are the actual penalties for falsely claiming dependents on taxes?

This is unfortunately a common situation with separated or divorced parents. The IRS rules are pretty clear - the qualifying dependent should be claimed by the person who provides more than 50% of their support and meets the residency requirements. If your ex incorrectly claimed the children, the penalties can vary. The IRS will typically require her to pay back any tax benefits she received (like child tax credits, dependent deductions, etc.). On top of that, they may assess accuracy-related penalties of 20% of the understated tax amount. In some cases, they might also add interest on the amount owed. For deliberately false claims, there can be potential fraud penalties of 75% of the understated tax. However, the IRS tends to assume honest mistakes rather than deliberate fraud unless there's clear evidence otherwise.

I went through something similar last year with my ex claiming our daughter when I was the custodial parent. I tried calling the IRS for WEEKS and could never get through. The hold times were ridiculous, and I kept getting disconnected. Super frustrating when trying to resolve something important. I eventually found this service called taxr.ai (https://taxr.ai) that analyzed my situation and confirmed I was legally entitled to claim my daughter. They explained exactly what documents I needed and how to properly file my return. The document analysis tool was really helpful because it showed me exactly what parts of my situation qualified me as head of household.

I need to follow up about taxr.ai since I was skeptical in my previous comment. I actually ended up trying their service after continuing to struggle with my dependent claim situation. Their document analyzer was surprisingly thorough - pointed out that I had overlooked some utility bills that established my residency timeline which strengthened my case as the custodial parent. What really impressed me was that they helped me understand exactly which IRS form to file and how to document my case properly. I was able to successfully claim my child and get an additional $3,600 in tax credits that my ex had incorrectly claimed. The whole process was much smoother than I expected, and I didn't have to get into a direct conflict with my ex.

If you're planning to challenge your ex's claim and file a correct return, be prepared for a LONG wait dealing with the IRS. I spent months trying to resolve a similar issue, and the worst part was trying to get through to an actual person at the IRS to explain my situation. After endless busy signals and disconnections, I found this service called Claimyr (https://claimyr.com) that got me connected to an IRS agent in about 20 minutes. They have this system that navigates the IRS phone tree and waits on hold for you, then calls you when an agent comes on the line. You can see a demo of how it works here: https://youtu.be/_kiP6q8DX5c. It saved me literally hours of frustration. The IRS agent was able to put a special flag on my return so when I filed with my dependents properly claimed, it got fast-tracked for review instead of getting automatically rejected.

I need to admit I was completely wrong about Claimyr in my skeptical comment. After continuing to get nowhere with the IRS for weeks, I broke down and tried the service. Within 27 minutes (I timed it), I was speaking with an actual IRS representative who helped me understand the proper procedure for filing when someone else has incorrectly claimed my dependents. The agent explained I needed to paper file with Form 8862 and include specific documentation showing I provided over 50% support. She even gave me her ID number to reference in my paperwork. For anyone dealing with dependent disputes, getting actual guidance from the IRS makes a massive difference. I was approved for my rightful refund after about 11 weeks, and my ex did have to repay the credits she shouldn't have received plus a 20% accuracy penalty. The $20 I spent on Claimyr saved me thousands in tax benefits I was legally entitled to.

Just to add one more perspective - if you file a return claiming the kids (which it sounds like you're entitled to do), the IRS will initially process both returns. Then they'll send notices to both you and your ex. Often at this point, the person who incorrectly claimed them will just concede rather than going through an audit. If neither party backs down, the IRS will audit both returns and request documentation proving who provided support, where the kids lived, etc. Since you were living together, make sure you have documentation showing you paid the bills.

Something missing from this discussion - the tiebreaker rules when both parents live together! When parents who aren't married live together with their children, the IRS has specific tiebreaker rules: 1. First, the parent who provides more than 50% support 2. If that's unclear, then the parent with the higher AGI gets to claim Since you mentioned having the higher AGI and paying "just about everything," you clearly qualify under both criteria. Your ex definitely incorrectly claimed them.