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tax identityLast month I told you about my travel adventure with Stephen E, AKA Steve E. “AKA” is police lingo short for  “also known as”.   You don’t want any mix-up with your identity, or with the identity of your dependents, when it comes to your income tax return!   Today it seems a newborn baby gets their social security number before they leave the hospital. What about a baby born at home? The important point is that any parent wanting to claim that new little bundle of joy must include the child’s social security number on the tax return.   When I add that baby to the return I also track the date of birth so we can claim every tax credit available. And different taxes apply to different taxpayers depending on their ages.   When you file your tax return you enter your name, address and social security number, or SSN. When you file a joint return with your spouse, you put both names and social security numbers. One person’s name and SSN are listed first. The other person’s name and SSN are listed second.   The name and number listed first is called the PRIMARY taxpayer. The other person is called the SECONDARY taxpayer. This does NOT mean that one is better than the other.   Remember this when you first marry: You can CHOOSE whose name and number goes first. The primary taxpayer is not always the male of the couple. But once you decide that HER name is going first, don’t change that order next year or any other year. That will just buy you trouble from the Internal Revenue Service. They might be expecting a tax return from HER next year and not be able to find any record. Then you get your letter asking to explain everything.   Other important numbers required for your tax return could include the daycare provider’s SSN. If that daycare provider is operating as a business they may have an EIN, Employer Identification Number.   With electronic filing of the income tax returns, name and number mismatch (when things don’t match up) can cause what is known as a reject. Something must be corrected before we can file that return. If someone has stolen your identity or the identity of your dependent, that can cause very inconvenient delays of your refund.   One year a return was rejected because the dependent’s name and SSN did not match. The IRS had just begun matching tax return identities with Social Security records. I called my taxpayer, let’s call him Mr Smith. I learned that for years I had been filing the return for Mr and Mrs Smith and their daughter, Ms Smith. But the daughter was MRS Smith’s daughter. And Ms Smith was really Ms Jones. The adoption was never legally finalized, the SSN records had never been changed and the tax return was rejected. We then mailed the return in with the explanation. Mr Smith’s nerve-wracking situation could have been avoided if he had just understood the importance of telling me the whole truth for his tax return.   Identity theft can also bring about other legal problems. If you find yourself in that position, please contact me so I can talk with you about what action you might want to take next.
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