Is this tax evasion??

[Bit_Image]

Hi!

I'm new here, but I have a question.

My wife filled BK in 2006, before she was my wife. She filled BK because of her X was in forecloser on a house that she co-signed when they were married, and she did not want to be stuck with it. Anyway, we married near the end of 06 and have a large tax return due. She has 4 kids, and I have 1, we are planning to file 'Married but seperate' tax returns so that I can claim all of the kids on my return. The point is, when my wife files her return, she will actually owe $, and the state cant take anything.

I have already worked both returns, and with 5 kids, I will get back $6k and she will owe $500. My question is, is this legal? or is there a stipulation that I am missing???

Thank you for reading my post!

[Bit_Image]

Bump. Can someone please give their input? Thank you.

[arkienurse]

have you checked the irs website? I don't know if it is legal or not. but can you claim HER kids on your return, when you have been married less than half the year? I thought in order to claim kids they had to live with you more than half the year and receive more than half their support from you...????
If the irs site doesn't answer, how about asking her lawyer that handled BK for her.

[Minnymouth]

Did her BK attorney or Trustee tell her to submit her income tax refund to him for the year 2006....???? This could have a bearing on what your trying to do by filing married but separate forms.....

If she is trying to avoid paying the Trustee any of her refund by not claiming her kids, and filing married separate it may not WORK.....

She needs to contact her attorney and see how to handle this........
especially since you have nothing to do with her BK.... and you have not been married more than 1/2 year..........

She may be forced into filing married - separate/w kids....... to satisfy the Trustee....

[Bit_Image]

Thank you for your responses!!!

My wife and I have been together for 2 years, and I take care of her and her kids. Her kids have lived with me in the same house since 2005, and all of 2006. In 2006 we were married just after she filled BK, I was no part of it. From what I understand, I am perfectly legal to claim the children as stepchildren. I am not worried about the legality of claiming the children. However, she is suppose to give a copy of the return to the trustee, and I am wondering if the trustee will take issue with the fact that I am cliaming the kids. It may be obvious to the trustee that we are filling married but seperately just to avoid the trustee taking our large return. But, I cant think of anything illeagal or otherwise to prevent me from doing this. Does anyone else have experiance with this??? Thanks so much!

[bige1030]

Given that, it's perfectly legitimate to claim her kids as your dependents - but not really as stepchildren (that relationship is created by marriage), but as "qualifying relatives". The definition in the 1040 instructions of "qualifying relative" leaves that category open to anyone in your household (residing there not contrary to local law) who relied on you for more than half of their support who is a US person (or resident of Canada or Mexico) who made no more than $3300 gross, and who wasn't married (or was married and had no tax liability if filing separately). With that, you can legitimately claim the children and have her not claim the children.

Of course, her trustee might find it fishy if she claimed the children in 2005. If the trustee decides to get nasty about this, the IRS will probably have to get involved and audit both your returns. You'll have to then prove (usually with receipts) that you provided more than half of the children's support and that you are otherwise entitled to claim the children as your dependents.

Things that will probably slow down the trustee's radar screen (i.e. make the trustee not doubt the legitimacy of the separate returns) are:
* If she didn't claim the kids in 2005
* If she didn't claim much, if any, expenses for them on her bankruptcy schedules
* If she had to pay taxes or barely got a refund in 2005