One of my dependents has not been listed on IRS tax transcripts for years

Question

After a very frustrating several hours to determine why the IRS adjusted my Recovery Rebate Credit Worksheet by $1,100, I finally found the answer.  To be clear, I spent nearly 3 hours either on hold or talking to various IRS agents.  Finally, one of them suggested that I download my IRS transcripts.   Upon review, for the past 4 years (probably longer, but transcripts go only back to 2017), I realized my youngest child is missing from every record.  I'm extremely upset since I told every agent that I have 5 dependents and their ages, and in two discussions that IRS agent looked only at the front of the 1040 and failed to recognize the check box and indication to see the rest of the statement if there are more than 4 dependents. I've been using TurboTax for nearly 20 years and added each of my children as they came into the family.  My youngest is 7 years old with a properly issued social security card
umber.  I checked the 1040 forms generated by TurboTax.   All years list all of my dependents with their SSN.    Where and how do I start to fix this situation?  Not only was I shorted on the Recovery Rebate Credit for this year, but there's a very good chance that due to this error, I'm due refunds from prior years!!! Again - all the paperwork\forms generated by TurboTax are correct.  It's the transcriptecord at the IRS that is incorrect.

Opus 17 · Accepted Answer

I spoke with a few IRS associates today and learned the following:

My 5th child does indeed exist on their records. For whatever reason, the downloaded transcripts don't show that individual, but we confirmed all 7 household members.
I'm still in disagreement on line 30 of the 1040, the Recovery Rebate Credit. What TurboTax 2020 generated and what I generated by hand match up. What the IRS revised the amount to, lowering it be ~$1,100 does not make sense to me.
Every time I request a line-by-line review of the Recovery Rebate Credit worksheet, I'm either denied by the agent or get disconnected in way or another. I want to know why my numbers don't align with their numbers... if the tables were turned, they'd have sent me a notice and be demanding payment!!

Still - the whole process thus far has been awful. I have written notes all over my desk about every call, every agents' ID\code, and so forth. Over 5 hours thus far between yesterday and today.

I'll open a separate discussion on the Recovery Rebate Credit.

@papacutler wrote:

Every time I request a line-by-line review of the Recovery Rebate Credit worksheet, I'm either denied by the agent or get disconnected in way or another. I want to know why my numbers don't align with their numbers... if the tables were turned, they'd have sent me a notice and be demanding payment!!

Unfortunately, if you claimed X qualifying dependents and they revised it down to X-1 qualifying persons, and reduced the payment by $1100, that is probably not something you can recover by filing an amended return, because whatever they thought was wrong the first time will still be wrong. (You could try filing an amended return and maybe get lucky with the person who processes it. But you would have to make manual adjustments in Turbotax--if your return is correct in Turbotax, you won't be able to automatically prepare the amended return.)

The Taxpayer Advocate office exists to help people like you, assuming they actually perform the job they are chartered to perform.

https://www.irs.gov/taxpayer-advocate

Opus 17 · Answer

Did you e-file or file by mail? I have no idea how the IRS could fail to include a child if you listed the child as a dependent on an e-filed tax return. If you correctly included the child in Turbotax, you should have claimed a child tax credit of up to $2000, depending on your overall income and tax situation. Did you not notice a deficit in your refunds?

Look at your tax return PDFs. It's possible for a child to be listed in Turbotax as your child but not listed as a dependent, depending on how you answer certain qualification questions. Your tax return PDF should have a checkmark in the box for "more than 4 dependents" and should include an "additional dependent worksheet" listing the name, SSN of the 5th child. It should indicate that the child qualifies for the $2000 child tax credit.

Normally, you would have to file an amended return by May 17, 2021, to claim any additional refund for your 2017 return. (Any refund due for 2016 and earlier is lost.). If your child is already correctly listed in your 2017 tax return data file, Turbotax won't be able to automatically prepare an amended return.

I would tell you to go directly to the office of the taxpayer advocate with your case. However, they are limited service due to COVID, and if you take your case to them, you may miss the May 17, 2021 deadline to file an amended return for 2017. You may also have a hard time proving your case. Part of your problem may be that if you filed electronically, you may have no proof that the electronic return sent to the IRS contained your 5th child. If you filed on paper, those records are microfilmed and you can eventually get copies, but if the data entry clerks just lost the additional dependent info page, you might still have no proof that you correctly claimed your child.

https://www.irs.gov/taxpayer-advocate

For now I would focus on 2017 since that's the deadline that expires first. Do you have a copy of your 2017 tax return PDF from Turbotax and can you download a copy of your 2017 tax return data file onto your computer? How many exemptions did you claim? Does your 1040 PDF match your 2017 transcript, and if not, where are they different?

What is your child tax credit on line 52 and your total tax liability on line 56?

Do you have an amount for "Additional Child Tax Credit" on line 67, and do you have a form 8812 in your PDF or your transcript?