Uniform Definition of a Child

[Snaggletooth]

Remember 3-4 years ago, when the IRS was going to finally clear all the smoke away and definitively decide what constitutes a qualifying child for all comers?

Although some of you believe there was a clear-cut definition, most of us (including me) have had a problem applying their changes.

Now comes this year, and if the water was ever clear, no more. I'm reading from NATP that IRS has changed conditions such that a "live-in" non-spouse can now claim children not of blood in certain circumstances, and in the last issue it will no longer be necessary for a custodial spouse to release via f. 8332 in order for the the non-custodial spouse to treat a child as a dependent for certain purposes, because the treatment no longer blocks the custodial spouse from claiming the child as well.

Don't have an electronic copy of this, or I would share a link.

Comments? IRS "solutions" never seem to take preparers into consideration. I'll have to confess I was incredibly naive to think IRS was really going to clean up any confusion.

[taxea]

Uniform Definition of a Child

You got me curious on this one so I did some surfing and found this:

http://www.myirstaxrelief.com/2008/07/rules-for-claiming-dependent-child.html

Where did you read the info that you posted...I couldn't find it on the website for NATP.
taxea

[solomon]

See Notice 2008-5. That is old news on the live in friend. Preparers have been doing that all year and can even amend open years.

Regarding the final regs. see:

§1.152-4

Regarding 8332 not being required for a child being a dependent of both parents see Rev. Proc. 2008-48.

[Snaggletooth]

Thanks for the Cites

Thanks for the Cites - note that they are all from 2008.

Taxea, the most recent issue of TAXPRO (from NATP) contains a full page on the topic of claiming a child for certain purposes without a 8332. The issue of "live-ins" claiming children came early in 2008, about six months ago. I can't find them on the NATP website, but Solomon's cites seem to go right to the heart of it.

Thanks - Snag

[Black Bart]

Amen, brother.

Remember 3-4 years ago, when the IRS was going to finally clear all the smoke away and definitively decide what constitutes a qualifying child for all comers?

...I'll have to confess I was incredibly naive to think IRS was really going to clean up any confusion.

I thought the same thing when they talked about a single standard for all the credits -- CTC, EIC, HOH, dependency, child care, etc. As usual, nothing helpful.

Snag, you remember some of the long, complex arguments/discussions we've had here in past years about such stuff and how there was legitimate disagreement about who qualified for what and who did not. Some really smart posters (IRS would have been lucky to have them) took 180 degree different positions. Contrast those examinations in minute detail with the "Freefile" self-prepared returns completed by those whose (I'll bet) sole criteria for everything is: "The kid lived with us." And I think the vast majority of those returns are processed exactly as is without much if any change. It's just astounding to think of the hoops we have to jump through trying to convince John Doe he can't claim so-and-so when he says (probably the truth) his neighbor's done it for 20 years with no IRS complaint. We're mandated to enforce complicated rules which the general public widely ignores without repercussion while we're threatened with preparer penalties for minor deviations.

While I know nobody's going to threaten the "poor and noble" taxpayer, I occasionally wonder just how much more they (IRS) think they can tighten up on us -- it's a continual ratcheting up of new standards: "You must do this now" or "You can't do that anymore." It just gets tougher every year.

And now -- that's off my chest and Oct.15 is past so I'm going to put "Closed until Tuesday" on the door and recorder, buy a bit of the grape, break out my hammock, get some very light reading, go out back and lay in the shade for a while. Adios, amigos.

[Snaggletooth]

Don't Stay Gone Too Long

Bart if you can justify a few days in the hammock, go for it. Just don't stay away too long or we'll worry that you've become indignant at intelligent conversation...

Yes, this whole matter of the child stirs memories of elongated discussions on TTB. Often involving some titanic scholars such as Bees and Burton Koss. And do you still remember Armando? I suppose the TTB board has its own version of Charles Dickens' "Hosts of Taxes Past."

[dtlee]

In case you are interested

Snaggletooth,

I know there was a lot of discussion here back in 2005/2006 and not too many people agreed with what Burton and I were saying, so I've been silent about this topic on this board for quite a while. However, I have followed this topic very closely over the past few years and have some information available on the web that you may be interested in.

In particular, this page

http://nytaxexperts.org/alldocuments.aspx

has the original proposal document from the IRS, the paper I co-authored with Burton in 2006, a cheat sheet that I created for 2005 and have updated each year since (and also a draft of the 2008 version).

Feel free to use any of the documentation you see there. The IRS addressed one of the issues Burton and I were describing in IRS Notice 2008-5. Another issue has been addressed by HR 6893 for years starting after 2008. I have no interest in rekindling the arguments of two years ago, so anyone who feels that you won't like what you think might be in there, please just disregard this post and please don't feel compelled to use the link.

[solomon]

From HR 6893

TITLE V--CLARIFICATION OF UNIFORM DEFINITION OF CHILD AND OTHER PROVISIONS

SEC. 501. CLARIFICATION OF UNIFORM DEFINITION OF CHILD.

(a) Child Must Be Younger Than Claimant- Section 152(c)(3)(A) of the Internal Revenue Code of 1986 is amended by inserting ‘is younger than
the taxpayer claiming such individual as a qualifying child and’ after ‘such individual’.

(b) Child Must Be Unmarried- Section 152(c)(1) of such Code is amended by striking ‘and’ at the end of subparagraph (C), by striking the period at the end of subparagraph (D) and inserting ‘, and’, and by adding at the end the following new subparagraph:

‘(E) who has not filed a joint return (other than only for a claim of refund) with the individual’s spouse under section 6013 for the taxable year beginning in the calendar year in which the taxable year of the taxpayer begins.’.

(c) Restrict Qualifying Child Tax Benefits to Child’s Parent-

(1) CHILD TAX CREDIT- Section 24(a) of such Code is amended by inserting ‘for which the taxpayer is allowed a deduction under section 151’ after ‘of the taxpayer’.

(2) PERSONS OTHER THAN PARENTS CLAIMING QUALIFYING CHILD-

(A) IN GENERAL- Section 152(c)(4) of such Code is amended by adding at the end the following new subparagraph:

‘(C) NO PARENT CLAIMING QUALIFYING CHILD- If the parents of an individual may claim such individual as a qualifying child but no parent so claims the individual, such individual may be claimed as the qualifying child of another taxpayer but only if the adjusted gross income of such taxpayer is higher than the highest adjusted gross income of any parent of the individual.’.

(B) CONFORMING AMENDMENTS-

(i) Section 152(c)(4)(A) of such Code is amended by striking ‘Except’ through ‘2 or more taxpayers’ and inserting ‘Except as provided in subparagraphs (B) and (C), if (but for this paragraph) an individual may be claimed as a qualifying child by 2 or more taxpayers’.

(ii) The heading for section 152(c)(4) of such Code is amended by striking ‘CLAIMING’ and inserting ‘WHO CAN CLAIM THE SAME’.

(d) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2008.

i

[Snaggletooth]

Free Flow of Ideas

I know there was a lot of discussion here back in 2005/2006 and not too many people agreed with what Burton and I were saying, so I've been silent about this topic on this board for quite a while. I have no interest in rekindling the arguments of two years ago, so anyone who feels that you won't like what you think might be in there, please just disregard this post and please don't feel compelled to use the link.

Hi Doug, and thanks for the link.

Please don't feel "not too many people agreed" with you. There was free flow of opinions on the subject. On a few of the finer points, Bees and Burton disagreed, and from my perspective, this should be interpreted as disagreement and nothing more. Burton, for all his expertise, is verbose beyond what some people have time or patience to follow, and Bees Knees chose to plunge deep in the codes and regs with him.

Most of us simply sat on the sidelines and didn't agree or disagree with either. In my case, I was not well-researched enough to enter the banter, and I'm probably speaking for most of us. We are above the fifteen-second "soundbytes" but do not necessarily have spare hours and hours during tax season to digest the fine points of the seemingly endless, flowing thought process.

I can't speak for the moderators, but I've been on this board from the beginning, and I can't imagine the expression of your position, or Burton's, being unwelcome here. I know they don't tolerate the dogma of tax protesters, and no one likes to hear arguments simply for the sake of argument itself. They also have asked that we not "bash" other people or companies in the spirit of derision. I have much respect for Burton, and I can't imagine anyone who doesn't. As far as Bees Knees, if you make a statement he feels is incorrect, he should be able to voice disagreement without other parties thinking he is trying to eliminate free speech.

[dtlee]

Thank you for your thoughts

Snag,

Please don't read too deeply into my post. I was not saying anything negative about Bees or Koss or anyone else. I have been a member of this board for quite some time and have a great respect for both of them and many others. I am not trying to rekindle the original arguments about the flaws in the law nor start a new one deriding my fellow members of this forum.

I never said anything against disagreements either. Like others in this forum, I do not post because I think I know everything, but because I think I do not. The discussion helps us learn, relearn, or refine our knowledge.

Finally, I did not say anything against free speech. If I thought some free speech were not allowed here, I would not have posted what I did. However, I do not think people have a right to free speech in someone else's domain and since this is the domain of TMI and since I want to remain a member, I reserve my right to not express my views here out of respect for them. As you might recall, Bees labeled our arguments as comparable to those of tax protestors and I have been concerned that our forum leaders may have believed that about me from other things they have done to my posts. While that notion is preposterous, I will not go into detail of how much I despise tax protesters, myself. Since they are entitled to their opinion, I am careful about posting my tax views here on this topic (despite the fact that the IRS and Congress has aligned themselves with those views).

There are still some issues that I have with this area of the law, but they have tightened it up since 2005.

[Nashville]

Publications

Doug - after checking out your link I see now that you are a writer for a NY tax publication. This now explains your approach to feeling like a "guest" with a professional courtesy not to expound broadly with differing ideas on the tax board sponsored by another tax publication. Also clears up some other things too, i.e. why long posts averse to recent regs, etc. could be associated with tax protesters -- this is a common pattern they use frequently.

We who are primarily TTB users love this board, and are just as proud of our TMI leaders as any in the business. Thank you for your contributions, and welcome back.

[dtlee]

Doug - after checking out your link I see now that you are a writer for a NY tax publication. This now explains your approach to feeling like a "guest" with a professional courtesy not to expound broadly with differing ideas on the tax board sponsored by another tax publication. Also clears up some other things too, i.e. why long posts averse to recent regs, etc. could be associated with tax protesters -- this is a common pattern they use frequently.

We who are primarily TTB users love this board, and are just as proud of our TMI leaders as any in the business. Thank you for your contributions, and welcome back.

Thanks, Nashville,

I am not an author, just an "ordinary tax preparer" like most of the rest of us on this board. I use The Tax Book as a resource and have since it first came out. However, when I do not have a worksheet or a document I like, I make my own. That is what you are seeing there.

However, we are all "guests" on the TMI site and I am not trying to compete with them in any way. The site I referenced was originally an "Intranet" site for a few close friends and when that service started charging me $40 a month, I rebuilt it as a Yahoo! group. People found the Yahoo! group "too confusing" to use, so after a few years, I decided to put it all on a public site.

I do not "sell" anything, but I do retain ownership of the documents because I have spent hundreds (if not thousands) of hours researching things and testing them so that they can be useful references for me. I have always taken the position that if anyone else wants to use them, they may do so and I freely share them with others, but I ask that they not hold me responsible for any errors even though I try to ensure that they are as correct as possible and I do make corrections whenever anyone alerts me to an error.

I started creating these charts when MACRS first came out. I used to carry around my own versions of the MACRS charts and people would ask me to have copies. As time went by, people would ask (perhaps "demand" might be a better word) for updates and additions. I still use those charts rather than look things up the IRS way.

The UDC chart began in 2003 when two close associates and I were holding a "do-it-yourself" summer seminar and I was telling them I did not like the new UDC proposal. I started making a chart of their new rules. When the law came out I liked it even less since I felt there were "holes" and other flaws in it. Burton likewise found holes in those laws and we found that we had this dislike for the new law in common. I still don't like it and I doubt he does either.

The method for identifying Qualifying Children came because I felt that most instructors teach as if they are using the Qualifying Relative rules (i.e., the old rules). A friend asked me how I thought the new rules should be applied and that document was born.

Other documents were built for courses or talks I gave. That is why there is no real organization to what they cover.