MFJ vs MFS and Fraudulent Return


#1

My client came to me in April 2017 to have me file a 2016 return for her. However, her estranged spouse had apparently already filed a joint return, without her authorization, including also the three dependent children. She received a refund from that return by check in the amount of $19k. The spouse was incarcerated and somehow had someone file the return for him. We called the IRS together and was advised to void the check and complete some form (I can’t remember which) reporting the fraud. Anyway, in response to her return that we went ahead and filed, the IRS said a return was already filed (no kidding!) and that only one needs to be filed (really???). My client filed HoH, but protective order for the spouse was date July 10th, so they disallowed the status. So, they put her to MFS and claims spouse itemized (they are counting the fraudulent return as his filing MFS). That means no standard deduction, no EIC, no add’l child care credit. For boot, they added Delinquency and Accuracy-Related penalties. Isn’t that fun? The woman made $28k for the year. Upon IRS recalculation, they now say my client owes $13k…what a joke! She never received the refund, btw, so she doesn’t owe the EIC and ACTC.
I pulled a transcript of the fraudulent return since her ss# was on it. Don’t you know the Sch A has over 50% of the income in charitable deduction? Clearly, this return has issues, but can’t seem to get the IRS to listen. They are suggesting she file amended return to change status to joint…lol. Any thoughts?


#2

I would connect her with a taxpayer advocate. It will move much smoother and there will be a direct person you all can deal with.