Dependency question

[cathe]

Taxpayer has live in girlfriend and her kids. This year she actually made enough money to file a return. She did not claim her kids because when she did his return on Turbo, she made him HOH, gave him EIC and Child tax credit.
Surprise, he got a letter from the IRS. Here is my question. If he made enough money to provide more than half of the kids support can he get their dependency - no HOH, EIC or child tax credit..... or are they a qualifying child of their mother only, even if she chose not to claim them.(which I think she should do,but she is not my client) because she filed?

Cathe

[Koss]

Girlfriend

Need just a little more info.

He may be able to take the children as dependents under the rules for a qualifying relative. As you noted, he is not eligible for EIC, HOH or the Child Tax Credit.

First--

If he made enough money to provide more than half of the kids support can he get their dependency

Whether he "made enough money" is irrelevant. The question is whether he actually provided more than half the support. If he lost his job in January, 2011, and was unemployed the rest of the year, he may have only "made" $1500 of earned income. But if had $100,000 in the bank, he could have very easily provided more than half of the support for the children.

Conversely, he might have had a salary of $100,000, but if he blew it all on gambling, then he wasn't supporting the children.

His earned income is certainly one factor that is used to determine whether he supported the children. But it may not tell the whole story.

Assuming that he did in fact provide more than half of the support for the children, and they lived with him for the entire year...

This year she actually made enough money to file a return.

That's a little ambiguous. It might mean that her wages were $9500 or less, and even without claiming her children, she got a refund of all her tax withheld. But she wasn't required to file a return, because she had no tax liability.

Or it could mean that her wages were over $9500. If that's the case, then she has a tax liability, even if it was only a few dollars, and she was required to file a return.

If she was required to file a return, then her boyfriend cannot claim her children as qualifying relatives, because they are her qualifying children. You cannot claim a child as a qualifying relative if that child is the qualifying child of another taxpayer.

If she was not required to file a return, and did so only to get a refund of tax withheld, then she is not considered to be a taxpayer in this context, and he can claim the children as qualifying relatives.

You won't know for sure whether he can claim the children as dependents unless you look at her return.

BMK

[Koss]

Qualifying Relative

If the girlfriend's income was under $3700, then she may also be his dependent under the rules for a qualifying relative.

Even if she already filed her return, and claimed her own exemption, it doesn't matter. She can file an amended return, or, upon review of the entire fact pattern, the IRS can change her return and take away her exemption. If her income was under $3700, her tax liability will still be zero. It won't change the bottom line of her return.

See Pub. 17, page 31.

Page 31 of the book, not page 31 of the PDF.

Not a Qualifying Child Test

A child is not your qualifying relative if the child is your qualifying child or the qualifying child of any other taxpayer.

[snip]

Child of person not required to file a return. A child is not the qualifying child of any other taxpayer and so may qualify as your qualifying relative if the child's parent (or other person for whom the child is defined as a qualifying child) is not required to file an income tax return and either:

Does not file an income tax return, or

Files a return only to get a refund of income tax withheld or estimated tax paid.

Example 1—return not required.

You support an unrelated friend and her 3-year-old child, who lived with you all year in your home. Your friend has no gross income, is not required to file a 2011 tax return, and does not file a 2011 tax return. Both your friend and her child are your qualifying relatives if the member of household or relationship test, gross income test, and support test are met.

Example 2—return filed to claim refund.

The facts are the same as in Example 1 except your friend had wages of $1,500 during the year and had income tax withheld from her wages. She files a return only to get a refund of the income tax withheld and does not claim the earned income credit or any other tax credits or deductions. Both your friend and her child are your qualifying relatives if the member of household or relationship test, gross income test, and support test are met.