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Ed Johnson
Ed Johnson, Tax Preparer
Category: Tax
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Experience:  GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
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May an employer in CA demand a copy of their employees federal

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May an employer in CA demand a copy of their employee's federal income tax return in connection with proving a "dependent" child for purposes securing health insurance coverage for that child? I have 2 issues with respect to that request: 1. Employee's Privacy, 2. Dependent as defined by the Internal Revenue Code is essentially a statutory fabrication which in many cases, such as divorced spouses, should have no relationship to the definition of a dependent for securing medical insurance.
Submitted: 8 years ago.
Category: Tax
Expert:  Ed Johnson replied 8 years ago.



An employer may demand proof of filing a return, which is common practice in some situations. BUT they are not entitled to view the contents of your return. They can not view it without your permission.


This is not the normal way to prove a child is a dependent. A child's birth certificate is normally all that is required.


A definition of child or dependent is normally determined by the insurance carrier. Most but not all insurance carriers follow the IRS rules on what is a dependent or child. For example. The IRS allows a parent to claim a child until age 24 if enrolled in a full time college, and if residing with the parents. Time spent away at school is considered time living with the parents. Most insurance companies will follow the IRS and allow children enrolled in school to continue to be covered until age 24.




1. The employer can ask for a copy of the return, if he or she feels that is what is needed to prove dependency. However this is not the normal reasonable practice.


2. The employer does not have a legal right to view the contents of your return, but has a right to get proof of filing and meeting your tax obligation. There is a special form the IRS gives form that provides that information without revealing the contents of your return. this is a common practice especially when an employer is bonding employees.


About the IRS definition: the so called statutory fabrication as you call it is in fact based on a persons legal or financial obligation to care for a person, whether voluntarily or not. It is based on a person actually having to spend resources to maintain a home and support a person, legally or voluntarily. Most insurance companies follow the IRS rules for dependency, a few are more liberal, and a few are more restrictive.


The big issue here that should be asked, is not if the employer has the right to demand the copy of the return. They have a right to ask, and if you show it, then they can view it; and you do not have to show a copy.


You can offer other proof of dependency, and the employee may or may not accept it.


The big question is: can the employer deny medical coverage to your dependents if you do not show a copy of the tax return?


The question phrased as I put it, is an employment law question.


IN most instances, if the employer asks for the same evidence from all employees, then it is legal; they can not discriminate.


On the other hand, if an employee offers alternative evidence of dependency, and the employer does not accept it, and subsequently denies coverage, the employee would have a cause of action for an equal pay act violation complaint.


Here is a possible solution to your situation:


1. Offer alternative proofs of dependency. birth certificates, adoption papers, school registrations, anything that shows you have a legal obligation; and or anything that shows the child is residing with you, and that your support the child or are the child's father, etc.


2. If that does not work, then provide a copy of a filed return, with all irrelevant information blacked out. Just showing the dependent listed in the top of the return. All other information line by line blacked out, except for the IRS certification stamp, and first six lines of the 1040. (do not black out the signature lines.)


3. Callenge his policy of asking for the information by filing a law suit.


Your employer, in practice shoudl not be asking for any proof of dependency except as required by the policy of the insurance carrier. It is the insurance carrier who sets the terms of proof.











Customer: replied 8 years ago.

Thanks Ed for your rapid response.


The employer is my ex-spouse's employer. She executed form 8332 releasing the right to claim my daughter as an exemption to me in 1999 for all future years. Thus the term "statutory fabrication", because the release of the exemption does not mean she does not provide support. Since she is in AMT, the exemption doesn't benefit her anyway. The employer has asked the employees to provide 1. Birth Certificate of the child, 2. Proof of child's address or school records, AND, 3. Proof that the child was claimed as a dependent on their tax return. Thus, in my opinion, the absence of the dependent on the tax return should not be used as a basis for denying coverage.

My ex is not inclined to make waves with her employer however I am inclined to write a letter to their counsel, HR and the insurance carrier to dispute their definition, probably anonymously. It is a large international defense contractor. She cannot be the only one impacted by this requirement.

If you wish to reply, you may, but you have given me a satisfactory response to my initial question.




Expert:  Ed Johnson replied 8 years ago.

I understand your employer's position.


However, since you are a divorced couple, under the special rules for divorced persons, you and your wife should both be listing the child on your tax returns. you have to list the child in order to claim the child for two tax benefits: (1) the exemption, and the child tax credit; (2) she lists the child on the tax return for all the other benefits and status of head of household if still married.


The child should be listed on both returns.


I agree with your assessment.



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