The CP87A means two tax returns claimed the same person as a dependent for the same tax year. The IRS sent this notice to both filers. Only one person can claim the dependent. The IRS is asking each of you to either confirm your claim or remove the dependent from your return.
Who Has the Right to Claim
The IRS uses tiebreaker rules under IRC Section 152(c)(4) when two people claim the same qualifying child. The hierarchy works like this: if only one person is the child's parent, the parent wins. If both are parents but they don't file jointly, the parent the child lived with longer during the year wins. If the child lived with both parents equally, the parent with the higher adjusted gross income wins. If neither is the parent, the person with the higher AGI wins.
For a qualifying relative (as opposed to a qualifying child), the person who provides more than half of the dependent's support has the claim.
How to Respond
If you have the right to claim the dependent, don't remove them from your return. The CP87A is not an order to remove the dependent. It's a request to verify your claim. Do nothing if you're confident in your claim, or respond with documentation supporting your right to claim.
If you don't have the right to claim the dependent, file an amended return (Form 1040-X) removing the dependent. You'll owe additional tax plus interest, and potentially penalties. Filing the amended return voluntarily is better than waiting for the IRS to remove the dependent and assess the additional tax with penalties.
What Happens Next
If both filers maintain their claim, the IRS will audit one or both returns to determine who has the right. The audit involves documentation: birth certificates, school records, medical records, lease agreements, and other evidence of where the child lived and who provided support.
The person who can't substantiate their claim will have the dependent removed, additional tax assessed, and potentially face accuracy-related penalties. If the claim was fraudulent, the consequences are more severe, including potential criminal referral.
If you've received a CP87A and you're confident in your claim, call us at (813) 229-7100. We can help you prepare documentation to support your position.