H of H living with mom and sister

[LCP]

This seems obvious to me but last years' preparer did it differently.

Taxpayer is 31 and lives with his disabled mom (who owns the home) and his 19 year old sister. He brings in about $20k and the mom's disability income is only $8k.

Seems like he's the H of H and both mom and sis are dependants getting him a nice EIC and some tuition credits.

[taxxcpa]

Sounds questionable

This seems obvious to me but last years' preparer did it differently.

Taxpayer is 31 and lives with his disabled mom (who owns the home) and his 19 year old sister. He brings in about $20k and the mom's disability income is only $8k.

Seems like he's the H of H and both mom and sis are dependants getting him a nice EIC and some tuition credits.

Have you considered the value of the housing provided by the mother? The combined value of the housing plus the $ 8,000 might be more than half of the support. Splitting the $20,000 three ways, assuming it was applied equally in the support calculation would imply less than half the support for the mother.

[Gary2]

Keep in mind that the calculation for HoH is not the same as the one for supporting the mother. In this case, the difference between filing HoH and single is small compared to the overall picture. The mother won't affect the EIC, so claiming her is probably just worth the exemption.

And just to add another two flies to the ointment, if the sister took out loans in her own name, that will count as support she provides for herself, which could remove her from being a dependent. On the other hand, any scholarships will also count as part of her support (since she's not the taxpayer's child - an oft forgotten rule). My guess is that it counts as third party support, at least for the non-taxable part, which would help for her being a QC.

I've never seen any authority confirm that non-taxable scholarships in this situation are considered third-party. Perhaps someone else could clarify this.

[taxmom34]

in order to get the EIC it would be because of his earnings regardless of his filing status.and at 20K he gets 0. it was my understanding that in order to get EIC you had to have children, mother and sis are not his children. or am i missing something here?

[BP.]

in order to get the EIC it would be because of his earnings regardless of his filing status.and at 20K he gets 0. it was my understanding that in order to get EIC you had to have children, mother and sis are not his children. or am i missing something here?

Yes, might be missing something . . . check TTB 11-9 & pub 17 p. 237 for people who may qualify a taxpayer for EIC.

[LCP]

I think I understand where my logic was off.

Clearly the son supports the household as a whole but its questionable whether he supports the mother and perhaps his sister.

Is the mother "primarily" responsible for supporting her daughter? If that's the case, her small disability income would be divided by two and it would be easier to show that the son supported them.

[Gretel]

Keep in mind that the support test does not apply for EIC. If all other tests are met, he can claim his sis for EIC.