Claiming married dependent

[FEDUKE404]

I think through the haze of off-season the parent can claim the dependent. Agree or disagree, please.

-- Single mom has legitimately claimed daughter as dependent for years.

-- Daughter is now in college, and although she makes some income in summer job, meets all requirements for mom to claim daughter as dependent and also to claim daughter's college credits.

-- Daughter is now (recently) married. Does NOT live with husband (military) but instead remains in college in same apartment, with mom paying for most living and college expenses.

Both newlyweds need to use married filing separately status for 2011. Name and Soc Sec number of the spouse will appear on both tax returns.

Daughter of mom will do so, but will claim zero personal exemptions. Mom WILL claim married daughter as dependent, and claim 2011 allowable college expenses.

New husband will claim his own personal exemption.

For tax year 2012, it is likely couple will file as married filing jointly and life returns to normal. (College is over, couple will live together, etc.)

Am I close?

FE

[taxea]

daughter would only file to recover refund due if taxes over withheld...otherwise you are on the mark.

[FEDUKE404]

Additional info

daughter would only file to recover refund due if taxes over withheld...otherwise you are on the mark.

Well, in reality daughter had to put up with kiddie tax, which went away......and then returned again when the rules changed..... She normally owes a few hundred $ at tax time.

For 2011, total income of daughter (including investment stuff) is likely to be <$6k. Summer school reduced the time available for part-time job.

Thanks for your input!

FE

[spanel]

according to the taxbook...3-15

"A person cannot be treated as a dependent if he or she files a joint return with a spouse. This rule does not apply if the joint return was filed only as a claim for refund and no tax liability would exist for either spouse if they had filed separate returns."



"Well, in reality daughter had to put up with kiddie tax, which went away......and then returned again when the rules changed..... She normally owes a few hundred $ at tax time."

My opinion according to the above posting.. since the daughter will have tax liability, then her mom cant claim her.. also, we have no idea if the husband will have liability either.. My thought it no, she cannot be claimed.

Chris

[FEDUKE404]

Rules differ for MFS

according to the taxbook...3-15

"A person cannot be treated as a dependent if he or she files a joint return with a spouse. This rule does not apply if the joint return was filed only as a claim for refund and no tax liability would exist for either spouse if they had filed separate returns."

My opinion according to the above posting.. since the daughter will have tax liability, then her mom cant claim her.. also, we have no idea if the husband will have liability either.. My thought it no, she cannot be claimed.

Chris

I think perhaps you are missing my point and basic reason for this TTB board inquiry........

It is likely that newlywed husband and newlywed wife will both have tax liabilities of some sort, but they would NOT be filing a joint tax return for 2011. Each would file a MFS return showing their own individual tax liability. The only unusual aspect is wife would not claim her own personal exemption, while her mom would.

OTOH, if daughter and spouse had no income tax liability, it appears the newlyweds could actually file a joint return AND the mom could also claim the dependent. This is the issue being specifically addressed by your quote from TTB. But that is not the situation being queried.

FE

[Dusty2004]

Does not matter what they file

I was incorrect what I posted and dtlee is correct. Sorry about that...

Dusty

[dtlee]

MFS or MFJ. The only way the mother can claim the married daughter is if the only reason the daughter is filing a tax return it to get ALL her money back.

Dusty

Do you have a cite for that?

What is being referenced here is the joint return test. I interpret this test to be that if the individual is married, the taxpayer cannot claim that individual as a dependent if he or she files a joint return unless the return is filed only for refund of all taxes paid (with no refundable credits) and no tax liability would have existed for either spouse had they filed separate returns.

It is not the "married" test, but the "joint return" test.

I have lots of unmarried children who are eligible for the "Making Work Pay" credit and are eligible to be claimed as dependents. Are you saying that the "joint return" test now covers separate returns as well?

[jimenright]

Community property rules may apply

if client resides in community property state.

[Gary2]

I agree with Doug. This is one of those points that many experienced preparers get wrong.

My take on it is this: Did the married, potential dependent file a joint return? No-they pass the test. Yes-they failed the test, but they get to take a make-up test: Did they file only to get a refund?

If you look up the IRC, you'll see that the make-up test isn't even in there. The rule is simply: joint returns fail, separate or not required passes.

So where does the make up test come from? Remember that other recent interpretation change, about claiming a qualifying relative who was a qualifying child of someone else? A couple of years ago, the IRS decided that if the "someone else" wasn't actually required to file a return, then that person wasn't a taxpayer, and hence couldn't have a qualifying child, so the child could be claimed as a qualifying relative. That rule has the exact same make-up test: If the "someone else" files only to get a refund but wasn't required to file, then the "someone else" still isn't a taxpayer, and the child can be claimed as a qualifying relative.

The reason for this is that a "return just to get a refund" isn't a real return. Congress told the IRS to come up with forms for reporting required information and calculating taxes, and separately, they told the IRS to come up with forms for getting refunds to people who weren't in the first group. The IRS decided, in the interest of economy, to use the same forms for both purposes. But legally, a return filed solely to get a refund is not a "tax return", it's a "refund request."

[dtlee]

I agree with Doug. This is one of those points that many experienced preparers get wrong.

My take on it is this: Did the married, potential dependent file a joint return? No-they pass the test. Yes-they failed the test, but they get to take a make-up test: Did they file only to get a refund?

If you look up the IRC, you'll see that the make-up test isn't even in there. The rule is simply: joint returns fail, separate or not required passes.

So where does the make up test come from? Remember that other recent interpretation change, about claiming a qualifying relative who was a qualifying child of someone else? A couple of years ago, the IRS decided that if the "someone else" wasn't actually required to file a return, then that person wasn't a taxpayer, and hence couldn't have a qualifying child, so the child could be claimed as a qualifying relative. That rule has the exact same make-up test: If the "someone else" files only to get a refund but wasn't required to file, then the "someone else" still isn't a taxpayer, and the child can be claimed as a qualifying relative.

The reason for this is that a "return just to get a refund" isn't a real return. Congress told the IRS to come up with forms for reporting required information and calculating taxes, and separately, they told the IRS to come up with forms for getting refunds to people who weren't in the first group. The IRS decided, in the interest of economy, to use the same forms for both purposes. But legally, a return filed solely to get a refund is not a "tax return", it's a "refund request."

Thank you, Gary.

More excellent points!

I will add one more. If the make-up test is taken, there is a trick question on it.

The trick question is the Making Work Pay Credit. If the joint return is filed and this refundable credit is taken, it is not a "return just to get a refund" any more and the person cannot be claimed as a dependent.

[FEDUKE404]

Losing focus on main issue

Interesting (and unexpected!) side discussions occurring here.

So are we now going with IRS "intent" as opposed to what is apparently stated in the rules?? An interesting aside: Although I have not encountered this situation recently, IIRC the IRS verbiage about the "joint return test" has remained essentially intact for many years!

I still, personally, feel the prohibition is firmly against the MFJ scenario (re mom) but appears OK with MFS option (no dependent exemption claimed by MFS daughter/mom claims dependent). As dtlee stated earlier, I think the first issue is the "joint return" and that is not being considered.

I will look into things further.

Also, FWIW, would someone please explain to me what possible relevance the cited Making Work Pay Credit has to do with a 2011 federal income tax return???

http://www.irs.gov/pub/irs-dft/f1040--dft.pdf

FE

[dtlee]

Also, FWIW, would someone please explain to me what possible relevance the cited Making Work Pay Credit has to do with a 2011 federal income tax return???

None at all, but any refundable credit is the same for a married couple. If a taxpayer files jointly and uses TurboTax, they might not realize they are claiming a refundable credit since some of these are so automatic.

Thanks for bringing us back to focus....

[taxea]

" Does NOT live with husband (military)"

Be careful with this statement...if he were not deployed elsewhere would she be living with him? Technically his deployment in the military does not "separate" them for tax purposes.
i.e. his deployment does not entitle her to HH.

[FEDUKE404]

Assuming facts not in evidence

" Does NOT live with husband (military)"

Be careful with this statement...if he were not deployed elsewhere would she be living with him? Technically his deployment in the military does not "separate" them for tax purposes.
i.e. his deployment does not entitle her to HH.

Once again, you are selectively reading my question.

I never mentioned anything about "deployed" (for the record, he is not!).

What I did mention was daughter continues to be a college student, living in apartment, with (virtually) all expenses paid by mom. Yes, it's a weird situation but no one ever asked me about it. (As best I can tell, the newlyweds will act more like such when college is over next spring.)

And I have NEVER said one word about head of household filing status for anyone (I think I can figure that part out).

So, to repeat the question concisely: Can the mom continue to claim the dependency exemption for recently married daughter, so long as the mom pays more than 50% of the 2011 support for said daughter, and the daughter files as married filing separately without claiming her own personal exemption for 2011??

I think the answer is "yes." Hence the post.

FE

[Gary2]

I think the answer is "yes." Hence the post.

Doug and I clearly agree with you. Dusty originally disagreed, and then swapped to agree with Doug's note.

I think it's so clear that MFS always passes the joint return test, regardless of any tax liability, that I took the liberty of elaborating on some of the more subtle aspects, just to go deeper into the issue. I apologize if that clouded things for you.