EIC Question

[Brian EA]

Taxpayer is HOH and has 3 children. The second one is 19 years old and a full time student who made $18,000 and would like to claim herself. To qualify for EIC, support is not a factor. Can the single parent use this child for EIC? If this is true can the child claim her education credit?
thanks
brian

[Koss]

Support Test

Brian EA wrote:

Can the single parent use this child for EIC?

Yes. Even if the child is not a dependent of the parent, the child may still be a qualifying child for EIC. As you noted, support is not a factor when it comes to EIC.

If this is true can the child claim her education credit?

Yes. If the child is not claimed as a dependent by her parent, then she is eligible for the education credits, including the refundable AOC.

The second one is 19 years old and a full time student who made $18,000 and would like to claim herself.

In general, when it comes to preparing the child's return, the rule is that the child cannot claim a personal exemption for herself if she could be claimed as a dependent by a parent. In other words, if the child meets the criteria for dependency, the child is considered a dependent of the parent, and the child is prohibited from claiming a personal exemption, even if the parent chooses, for some reason, not to claim the child as a dependent.

But on your fact pattern, that may not be an issue. If the child made $18,000, then it is likely that she is providing more than half of her own support. Therefore, the child is not a dependent of her parent.

She is nevertheless a qualifying child of her parent for EIC.

Your software, within the EIC screen, should have an option for identifying a qualifying child for EIC that is not a dependent of the taxpayer. This actually happens a lot, in a different context: When the custodial parent releases the exemption, the custodial parent can claim EIC but not the dependent exemption.

BMK

[taxea]

Do the TP and child realize the consequences of this action. The TP will lose if the child files single rather than dependent status. The credits are probably better used on the TP return unless TP has very high income. Kids!

[Brian EA]

Your software, within the EIC screen, should have an option for identifying a qualifying child for EIC that is not a dependent of the taxpayer. This actually happens a lot, in a different context: When the custodial parent releases the exemption, the custodial parent can claim EIC but not the dependent exemption.

BMK[/QUOTE]

I use Drake software and it has an excellent worksheet on EIC.
The tax payer made $27,000. Her eldest child is 22 and attended college full time with loans from the Govt.The last child is 11.
Her refund is maximized with the second child claiming her self and qualifying her mom for the EIC.
Thanks Guys. With the season going this crazy, I just wanted a confirmation
brian