Twenty Fake Dependency Exemptions Generate $300K Tax Refund?

Twenty Fake Dependency Exemptions Generate $300K Tax Refund?

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Blake Ellis of CNNMoney writes about a woman who fraudulently claimed 20 child dependents on her income tax return:

Tax fraudsters are getting more creative — and, in some cases, more daring. But the IRS is making it harder for them to get away with their tricks.

Late last week, a Los Angeles woman pleaded guilty to filing tax deductions for at least 20 fictitious children — which she claimed were all born on the exact same day — in order to land a $300,000 refund, according to the United States Attorney’s Office of Los Angeles.

Norma Coronel, 40, admitted to obtaining Social Security numbers for the 20 fabricated children and having the money sent to her residence and to bank accounts she controlled, according to the Attorney’s Office. She faces a maximum sentence of 18 years in prison and a maximum fine of $750,000.

There is something missing here.

Each dependent reduces a taxpayer’s taxable income by $3,200. Thus, Ms. Coronel’s 20 fraudulent dependents would only have reduced her income by $64,000. Which means that even were she paying tax at the maximum statutory rate of 35% she could have only cheated the government out of $22,400 (35% of $64,000).

I have no idea where the $300,000 refund came from, but it would take more shenanigans than just a few fake dependency exemptions to generate it.

If anyone has the answer to this, please chime in because I don’t feel like doing the research.¹


¹  Since Ms. Cornell is to be considered innocent until proven guilty and since her 20 claimed children were all born on the same day, we must conclude that she is either Angelina Jolie or has a womb the size of the Paijanne Water Tunnel.

About Peter Pappas

Peter is a tax attorney and certified public acccountant with over 20 years experience helping taxpayers resolve their IRS and state tax problems.

He has represented thousands of taxpayers who have been experiencing difficulty dealing with the Internal Revenue Service or State tax officials.

He is a member of the American Association of Attorney-Certified Public Accountants, the Florida Bar Association and The Florida Institute of Certified Public Accountants and is admitted to practice before the United States Tax Court, the United States Supreme Court, U.S. District Courts - Middle District of Florida

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  1. Adoption Credit ?

  2. That’ll do it at 15k each.