EIC and student loan proceeds

[BHoffman]

Client is single with no dependents, is 30 years old, shares an apartment with friends.

Goes to college and works part-time.

His AGI is approx. $10k and he appears to qualify for about $250 of EIC.

I asked about income and parental support. He says he receives nothing from his parents and lives off his earnings and some of his student loan proceeds that aren't used for tuition.

Would any of the student loan proceeds used to pay for living expenses disqualify the EIC? I think not, but would like your opinion.

Thanks!

[ChEAr$]

Client is single with no dependents, is 30 years old, shares an apartment with friends.

Goes to college and works part-time.

His AGI is approx. $10k and he appears to qualify for about $250 of EIC.

I asked about income and parental support. He says he receives nothing from his parents and lives off his earnings and some of his student loan proceeds that aren't used for tuition.

Would any of the student loan proceeds used to pay for living expenses disqualify the EIC? I think not, but would like your opinion.

Thanks!

If anything, the funds from those loans only reinforce the fact that he is indeed self supporting.

[BHoffman]

Thanks Harlan!

[erchess]

Harlan

If anything, the funds from those loans only reinforce the fact that he is indeed self supporting.

Would it make any difference if the loans were co signed by his parents or even not signed by him at all? I know that I repaid my college loans out of my own earnings but I think my parents had co signed and would have been on the hook had I defaulted. I believe that some of my college peers' parents took responsibility for paying the loans off.

[Nashville]

Good for EIC

I have emphasized loan proceeds quite often in justifying EIC. There is a question on the checklist as to whether the income is sufficient to support the household.

Often, there is no way some of these low income people claiming EIC can support HH status on reported income alone. In order to make a case for claiming EIC, other souces such as student loans, child support, disability have to be taken into account.

[ddoshan]

But they do not have to support the household and or qualify for HH filing status. A single guy age 23 who made say 4100 dollars and has a child and is living with his girlfriend in a home she owns and makes 40K a year can still file and get EIC.

[Nashville]

Where did I miss requirements?

I was indeed aware that a child did not have to be a dependent.

But I didn't know someone other than the taxpayer virtually supports the household, and yet taxpayer can claim EIC.

[ChEAr$]

The main thrust of that dad gummed EI C due diligence checklist is to make sure that nobody else is supporting the taxpayer. (We're getting too paranoid about this whole EIC thing.)

The facts Beth spoke of sure sound like he qualifies to me.

[taxmom34]

in order to qualify for EIC for a single person is his age, so if client is 23 and makes $4100 he does not qualify for himself. doesn't he have to be between 25 & 65 years old.

[Gary2]

in order to qualify for EIC for a single person is his age, so if client is 23 and makes $4100 he does not qualify for himself. doesn't he have to be between 25 & 65 years old.

In the example as given, he and his girlfriend had a child. Since they both are parents, and both meet the residency requirement, either one is allowed to claim the child as a dependent - which brings with it the ability to qualify for EIC.

[taxmom34]

i wasn't thinking of the child qualifying for EIC because the girlfriend had much more income than he had (in the scenario) and she would be the one to claim the child and HH. i was thinking of him with his low income only

[ddoshan]

In my example I meant to imply that the child was his and not the girlfriends. Just to clear up what I was trying to say.