Dependency Exemption of Fosterchildren

[gfizer]

Children ages 12 and 15 were removed from their natural mother's home by Department for Families and Children and were placed as foster children with my taxpayers because their natural father (divorced from their mother) was deemed unfit at the time as well. The children remained with my clients for 8 months of the year and then they were placed in the custody of their father in November of 2009. I attempted to e-file my client's return allowing them to claim the exemptions for their foster children but got a reject saying that they had already been claimed on another return (I assume their fathers).

Who is actually entitled to the exemption and how do we rectify this? Should I just paper file the returns and let the IRS straighten it out or what? Thanks for your input.

[jainen]

>>Department for Families and Children<<

Eligible foster children, placed by the appropriate agency, are treated the same as natural children. If they meet the requirements to be qualifying children (which presumably these do), then the father's claim under the qualifying relative rules would be disallowed. Unfortunately, you can only resolve this by paper filing with some later correspondence.

In my opinion, the tax preparer should not take on the entire responsibility for this decision. Considering the children's best interest (including safety), the family should be referred to the placement agency and their own attorney for guidance.