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srootie01

Taxes & Interest

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My sister owns a home that her former boyfriend resides. He pays the mortgage, but the house is soley in her name. He took it upon himself to claim the taxes and interest on his 2008 tax forms. She found this out after the fact and now she is concerned because she needs the deductions and is afraid to claim. Does she have a legal right to report him and claim the taxes and interest on her 2008 taxes?

Also, they have a child together and they both pay daycare. He has paid $4000 and she has paid $4000. In addition to claiming his $4000, he claimed her $4000 as well. Taking away yet another tax deduction that she should claim.

What can she do to him legally and can she still claim what is rightfully hers when she files her 2008 taxes?

Please respond as soon as possible as she is wanting to file her taxes in the upcoming week.

Thank you,

Stacy

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Just based on what is stated here, she can't claim the mortgage interest payments because she didn't pay the mortgageā€”he did. You can only deduct interest that you pay, not interest paid by others. Nor could he take the deduction because he doesn't own the home and isn't liable for the mortgage. Thus, their arrangement may well mean that no one gets to deduct the interest.

She might want to see a tax attorney to determine if the arrangement she has with her ex-boyfriend amounts to a lease arrangement, in which case the payments might be deemed to effectively be the same as though he paid her rent and then she made the mortgage payment. But, of course, that means she'd have to declare those payments as rental income, too.

It sounds like they live apart. As for the child care credit, only one of them can claim that credit. That's the parent with whom the child lived the most during the year. If the child spent more time with your sister, she would be the one to claim the credit and he could not claim any credit at all. Her credit would be limited to only the amount she paid. Thus, only one of them will get the credit for the $4,000 they spent for child care.

If your sister qualifies for any deduction, credit, or exemption, she can claim that on her return and she need not care about what her boyfriend claimed. If he filed first and claimed certain deductions or credits for the child, she may find that her electronically filed return is rejected. All that means is that she needs to file on paper. She'll still get her refund, it will just take a few weeks longer to get. When the IRS matches returns later, it will ask them both to justify any conflicting claims to benefits for the child. As long as she can show she was entitled to what she claimed, she won't have a problem.

I suggest she read carefully IRS publication 503 on the child and dependent care credit, Publication 936 on the home mortgage interest deduction, and Publication 527 on rental properties before filing her return so that she understands the rules for these things before she files. She may want to consult a tax professional (tax attorney, CPA, or enrolled agent) for assistance with her return to get it right.

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