EIC Question

[oceanlovin'ea]

I KNOW this has been covered MANY times on the board. But I did search and didn't find my answer there.

Son lives with mother but father claims him on return. Mother has never put him on her return because father claims him. But if she lists him on her return and says that he is not her dependent, she will get EIC for him. Father will get exemption and child tax credit but she gets EIC. Am I correct in this statement?

I have had 2 people come in today and both of them have a child that they never put on their return even though the child lived with them. So that was a strange coincidence for sure.

It's been a long day. Had 9 clients come in today. okay, 8....husband and wife came in separately to sign 8879. But I love all of them.

Linda, EA

[mactoolsix]

Pub 596 Rule #9

Rule 9

Qualifying child of more than one person

Sometimes a child meets the tests to be a qualifying child of more than one person. However, only one of these persons can actually treat the child as a qualifying child. Only that person can use the child as a qualifying child to take all of the following tax benefits (provided the person is eligible for each benefit).

The exemption for the child.

The child tax credit.

Head of household filing status.

The credit for child and dependent care expenses.

The exclusion for dependent care benefits.

The EIC.

The other person cannot take any of these benefits based on this qualifying child. In other words, you and the other person cannot agree to divide these tax benefits between you. The other person cannot take any of these tax benefits unless he or she has a different qualifying child.

From: http://www.irs.gov/publications/p596/ch02.html

Mike

[dtlee]

I KNOW this has been covered MANY times on the board. But I did search and didn't find my answer there.

Son lives with mother but father claims him on return. Mother has never put him on her return because father claims him. But if she lists him on her return and says that he is not her dependent, she will get EIC for him. Father will get exemption and child tax credit but she gets EIC. Am I correct in this statement?

I have had 2 people come in today and both of them have a child that they never put on their return even though the child lived with them. So that was a strange coincidence for sure.

It's been a long day. Had 9 clients come in today. okay, 8....husband and wife came in separately to sign 8879. But I love all of them.

Linda, EA

Not sure I read the same question, but since some details are missing, I might just be reading the question wrong.

Son lives with the mother but father claims him on return.

Are you saying that the parents live apart the entire year? Are the parents married? Are they divorced? Never married?

If the parents are divorced or lived apart for the last six months of the year, the divorced or separated parents rules apply if one or both parents had custody for the year and together the parents provided more than half of the potential Qualifying Child's support.

Does the mother have custody for more than half the year counting nights?

- If so, she is the custodial parent. Did the father have a signed (by the child's mother) Form 8332 allowing him to claim the child for dependency and Child Tax Credit only?

- If so, then the mother (if she and the child are otherwise qualified) can claim Head of Household, Child Care Credit, and Earned Income Credit.
- If not, the father has no claim to this child.

- If not, she is not the custodial parent and cannot claim the child under the circumstances described (unless I am missing more details).

[mactoolsix]

Either way, you can not split up the CTC & EIC, which I think was Linda's original question . . .
Mike

[David1980]

Either way, you can not split up the CTC & EIC, which I think was Linda's original question . . .
Mike

Under the exception for divorced or separated parents you could. However the original question didn't state whether they were divorced/separated or not. If that exception applies, the custodial parent can claim EIC/HOH/2441 while the rest go to non-custodial (if custodial signs them away with an 8332).

[mactoolsix]

I Stand Corrected

Under the exception for divorced or separated parents you could. However the original question didn't state whether they were divorced/separated or not. If that exception applies, the custodial parent can claim EIC/HOH/2441 while the rest go to non-custodial.

Thank you!
Mike

[oceanlovin'ea]

Divorced

Sorry. They are divorced. He brings her the 8332 every year to sign for him to claim youngest son. She claims other 2 children.
She is custodial parent. There is not joint custody.

That is the main one I was asking about.

The second one mother and father were never married. But she has always allowed father to claim younger child. So that is a different situation. I will deal with her later. Not ready to do her return yet.

Linda, EA

[Koss]

Joint Custody?

Under federal tax law, there is no such thing as joint custody.

The custodial parent is defined as that parent with whom the child lived for more than half the year.

The IRS no longer recognizes any divorce decrees or court orders. If the taxpayers assert that the child lived with each parent exactly half the year, then the custodial parent is that parent who has the higher AGI.

And under federal tax law, the custodial parent gets to claim all tax benefits, unless she chooses to sign Form 8332. If she chooses to sign Form 8332, then the noncustodial parent gets the exemption and the child tax credit, while the custodial parent is still eligible for EIC, HOH, and the child care credit, assuming that the other criteria are met.

I am not disputing the conclusion reached earlier in this thread. I am simply clarifying that joint custody and shared parenting have no meaning under federal tax law. There is only one custodial parent, and that parent gets to claim all benefits associated with the child, unless that parent signs Form 8332.

The court order or divorce decree is does not change the federal law.

If the court order says that "Robert" gets to claim the child, and Robert is the custodial parent, as that term is defined by the tax law, then Form 8332 is not necessary. Robert gets to claim the child because he is the custodial parent--not because of what it says in the court order.

If the court order says that "Robert" gets to claim the child, and Robert is the nocustodial parent, as that term is defined by the tax law, then he can only claim the child if the custodial parent signs Form 8332. And he only gets the exemption and the CTC. The custodial parent still gets EIC and HOH.

The court order may have the effect of requiring the custodial parent to sign Form 8332. If she does not do so, then she may be found in contempt of court for failing to obey the court order. But unless she signs the form, the noncustodial parent cannot claim the child. Period. That is the federal tax law.

BMK

[BP.]

They are divorced. He brings her the 8332 every year to sign for him to claim youngest son. She claims other 2 children.
She is custodial parent.

if she lists him on her return and says that he is not her dependent, she will get EIC for him. Father will get exemption and child tax credit but she gets EIC. Am I correct in this statement?

Linda, if I understand your original post about the first group of mom/dad/kids:

Mom is custodial parent of 3 kids. She lets non-custodial parent claim exemption and CTC for one child via 8332. She claims exemption for the other 2 kids. Is that right?

So, yes, your statement is correct; she does qualify for EIC for all three kids.

[oceanlovin'ea]

Thanks to all of you for your answers. Koss, I really appreciate your knowledge and statement of facts. BP, that is it exactly.

I guess it always puzzles me how things can get missed. My grandson was at the house yesterday because he had a bad cough and didn't go to school. He gave her a big hug and she said he reminded her of her youngest son. She showed me his picture and we got to talking about him. She said his father claimed him. So I asked questions. She just never put him on the return. I will amend 3 years of tax returns for her and put him on.

We just have to keep asking questions and search for the answers.

Linda, EA

[Bonnie]

Only the parent who the child lived with for the larger part of the year gets EIC. I feel this gets done wrong too many time. Regardless of which parent gets to claim child as dependent, the only one who can get EIC is the parent the child lives with. Most taxpayers don't understand this and a lot of preparers too. Too many times the custodial parent thinks because the non custodial parent gets the exemption that they can't claim that child for EIC. When in reality they are the only person entitled to EIC for the child even tho non custodial parent claims child. So yes, in this case the child qualifies one person for dependent exemption and CTC and the other for EIC and HOH

[BP.]

We just have to keep asking questions and search for the answers.

Since it sounds like this person had qualified for EIC on 2 other kids, your new, improved EIC due diligence routine with your clients will be uncovering these kinds of scenarios as you ask the right questions.