Death & Taxes

Okay, we're on a dark trajectory here but writers write about life. We see and observe and pull from our own experiences to communicate a story or information to our readers. Even when it's painful.

My heart goes out to those who have experienced a loss recently.

As I indicated in an earlier blog, I worked for a leading tax firm for more than a decade. One of the client returns that will always stay in my mind is the young couple who came into the office to have their return prepared and who's three-month old baby had died. I've actually prepared quite a few returns where someone - a spouse, a child, a sibling, a parent - has died and there are varying degrees of difficulty in handling these cases. On the one hand you can't always tell where the person(s) is at in the grieving process and on the other hand you have to conduct an objective interview to complete the tax return for the client. After dealing with a death the last thing I wanted to do was create a tax problem for them.

As it turns out for this couple their baby was born in the beginning of January and died before the tax deadline. I personally marveled that they were even dealing with the tax issue at that point. They even had the social security card for their now deceased baby. It was clear they were hurting but also that they were trying to move on with their lives.

One of their questions concerned whether or not they could even claim the child on their tax return and the answer was a definite yes. When clients had questions I routinely opened up the IRS publications and showed the client exactly what the IRS determination was on a particular topic. The IRS as you can imagine has to define many things and one of those issues is when someone can actually claim another person as a dependent on their tax return. The death of a child is specifically addressed.

Even if the child only lives for a moment (and of course the medical folks determine this) the child is considered to have lived long enough to be claimed as a dependent. The parent(s) still have to obtain a social security number to claim the now deceased child but can you imagine trying to hold it all together to do this?

A stillborn child cannot be claimed. I prepared a tax return for this situation as well. That was tougher in some ways because after all they had been through, the parents didn't even have validation from the government that the child had existed.

A kidnapped child can also be claimed but the parents or guardians have to meet three tests to claim the child one of which is proof from law enforcement that the child was kidnapped and by someone other than a family member.

So, life, death, taxes and even writing all have one thing in common - details are important.