Exemptions

[ChEAr$]

for daughter and grandchild.

1. daughter is 26 years old, lives separately from parents because she has a child. Her mom pays rent and utilities. daughter has no income, is citizen, never married.

2. grandchild lives with her mother in apartment paid for by grandmother (my client btw). The father lives elsewhere but pays child support.

Dependency rules used to be so simple, or so I thought. Looks to me like my client can claim her daughter. But what about the grandchild? Who gets to claim her?

Taxbook chart on 3-16 indicates the father is out of luck. Naturally he can't claim HOH. even assuming he pays more than 1/2 child's support, still out of luck and can't claim dependency exemption. (first example given)

Have I got the hang of it yet? (grin

Anyway, what's to prevent grandma also claiming the grandchild?

[ToledoEd]

Because of age, the daughter would be treated as other people and would have to have lived with parent in order to claim her. The grandchild would also have had to have lived with her in order to be claimed. Other than the residency issue I believe grandparent could claim both.




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All statements are my own opinion and not to be relied on without further research.

[BP.]

But what about the grandchild? Who gets to claim her?

Grandmother can claim grandchild, too. No member-of-household test for these QRs. TTB p. 3-18.

[Gene V]

Relavtives who do not have to live with you

I would think the daughter and granddaughter would fall under the Qualifying Relative test--see Pub. 17 (2011) page 26 and 32.

[ChEAr$]

2 of three agreeing with me. Looks like we've got this one knocked.

[appelman]

Watch for support test

You haven't said if grandmother is paying more than half of total support. That's a requirement for claiming daughter. Grandchild will be a qualifying child from grandmother, since child's mother has no income. No HofH, though. I find that the easiest guide for getting your head around these issues is the instruction book for the 1040.

[FEDUKE404]

The dependency maze

You haven't said if grandmother is paying more than half of total support. That's a requirement for claiming daughter. Grandchild will be a qualifying child from grandmother, since child's mother has no income. No HofH, though. I find that the easiest guide for getting your head around these issues is the instruction book for the 1040.

Scenarios like this one drive this old frazzled brain to the absolute brink (it's a very short trip, at times....).

I agree it sometimes becomes necessary NOT to think but to write the facts down, get out the IRS pub, and slowly work your way through the flow chart. (I've been known to make a copy of the chart, plot the "path" with a black marker on the flow chart, and then toss that into the client file for later use when I review the file and say "How did I ever reach that conclusion??") A morning cup of strong coffee is also recommended!

Plan B is to play "beginner" and go through the Q&As for your tax software. In most cases I am a "forms" person, but it is nice to have a backup available.

As for this scenario, I pretty well conclude chEAr$ is correct. HOH is pretty well out for all, and qualifying relative exceptions help grandmother. Things could have been a bit more interesting had child/grandchild actually lived with the grandparent.

What is unanswered, but might be worth pursuing, is whether the daughter actually lives alone (in apartment with daughter), and also be sure that the 50% support rule is met for daughter/granddaughter. I might at least speculate that some government funds, separate from stated child support, might be rattling around in the woodwork.

FE

[BP.]

Grandchild will be a qualifying child from grandmother

Grandchild is QR- fails QC member-of-household test.

[appelman]

Nice catch.

One more hoop.

[ChEAr$]

Thanks to all for comments. We've all scratched our collective heads over little scenarios like this.

Evan, right, still to be uncovered is the support tests.

True situation in daughter's apartment also not yet completely clear. Baby was born probably last October.

Now ready for some more of the story? Grandmother (client) and husband will also be claiming a son who lived with them all during 2012 by virtue of being under house arrest (anklet bracelet!). He's awaiting trial for................. for............. taking a baseball bat and hitting his sister's recalcitrant boyfriend (father of the grandchild) up side the head! Sounds like the making of a tv show,you reckon?

[David1980]

Taxbook chart on 3-16 indicates the father is out of luck. Naturally he can't claim HOH. even assuming he pays more than 1/2 child's support, still out of luck and can't claim dependency exemption.

I agree he can't claim HOH, why are we ruling out him claiming the child though? If the mother had income / was claiming the child sure, he'd be outta luck. The mother has no income and is not claiming the kid (or filing a return, I'd imagine). Under the qualifying child rules, the father would need the mother to sign over the exemption, so let's assume she's not. The child can't be claimed as a qualifying child by the father. Let's move to qualifying relative rules. Obviously the relationship is fine, the child likely has no income so the income rule is fine, leaves the "cannot be qualifying child of another taxpayer" and "support" rules. Let's say the father does provide over half the child's support. Now we're down to "qualifying child of another taxpayer" for which he's fine as well, since the mother has no income / is not filing a tax return.

It appears to me the father might be able to claim the child as a qualifying relative, assuming he pays over half the support. In fact, if the father pays over half the support it would seem the grandmother couldn't possibly claim the child since she isn't providing over half the support. On the other hand, if the grandmother is providing over half the support the father wouldn't meet the requirement for qualifying relative and couldn't claim dependent.

So, I think we're looking at qualifying relative rules and it hinges on where that support is coming from.

[ddoshan]

for daughter and grandchild.

1. daughter is 26 years old, lives separately from parents because she has a child. Her mom pays rent and utilities. daughter has no income, is citizen, never married.

2. grandchild lives with her mother in apartment paid for by grandmother (my client btw). The father lives elsewhere but pays child support.

Dependency rules used to be so simple, or so I thought. Looks to me like my client can claim her daughter. But what about the grandchild? Who gets to claim her?

Taxbook chart on 3-16 indicates the father is out of luck. Naturally he can't claim HOH. even assuming he pays more than 1/2 child's support, still out of luck and can't claim dependency exemption. (first example given)

Have I got the hang of it yet? (grin

Anyway, what's to prevent grandma also claiming the grandchild?

I am assuming the daughter does not live with her mom. If so, the father could claim the child as a qualifying child if the mother were to sign 8332 to allow him to do so. If so, dad would have priority over grandma.

[Burke]

I agree it sometimes becomes necessary NOT to think but to write the facts down, get out the IRS pub, and slowly work your way through the flow chart. (I've been known to make a copy of the chart, plot the "path" with a black marker on the flow chart, and then toss that into the client file for later use when I review the file and say "How did I ever reach that conclusion??") A morning cup of strong coffee is also recommended!FE

I must admit, you come up with the greatest ideas. I am going to steal this one and use it. Are there royalties?

[ToledoEd]

I have to say that I did not look at the chart for qualifying relatives close enough. Assuming the support test is met I would have to agree that both daughter and grandchild would qualify as dependents.

FEDUKE404, I like the idea of putting the paper with your thoughts on it in the file.

[RitaB]

Whew

The things we go thru to redistribute wealth in this country. I wish they would stick to stamps and lines on the road.