Question

Heila is the daughter of your neighbor, Mary. She and her 6-year-old son moved in with Mary in August. Mary would like you to prepare a return claiming the grandson as her qualifying child. What do you do? File the return since you know that Mary has done them a favor by allowing them to move in.

Answer 1

The options are missing:

1. File the return since you know that Mary has done them a favor by allowing them to move in.
2. Explain the residency requirement and file the return showing the grandson lived with Mary for more than half the year.
3. File the return, but only after Mary assures you that Sheila will not be claiming her son.
4. Explain to Mary that she is not eligible to claim her grandson, and that you cannot knowingly file an incorrect tax return.

My answer would be:

4. Explain to Mary that she is not eligible to claim her grandson, and that you cannot knowingly file an incorrect tax return.

Step-by-step explanation:

This is both a legal and ethical question.

Legally, Mary is not allowed to deduct Heila's son as her dependent because she only lived with her for 5 months and the minimum requirement is 6 months.

Ethically, you are asked to benefit someone that is your friend (or might not), but in order to do so you must break the law. Is it ethical to break the law in order to benefit an specific person? The answer is no, the law should be the same for everyone. To be honest, no one will probably even realize that you did something illegal, but bad actions always have consequences and we do not always realize them.