Earned Income Credit

[jbinkley13]

With all the Tax Preparer penalties now facing us in regards to Earned Income Credit, I am starting to question every little move I make when it comes to Earned Income Credit. I am probably over analyzing this but here is my question.

I have two families living in the same home. The daughter, husband and their son have lived in the same home as her parents all year. The daughter and son both have earned income (about 30K) and qualify for EIC.

The parents (ages 69 and 60) have a disabled 39 year old son and a 85 year old mother living at home with them as well. Besides husband pension and social security, wife had earned income of (about $30K) as well. This is the first year that based on the EIC rules they would also qualify for EIC.

Both families are filing married filing joint.

Can both families living in the same home who each file married filing joint take the Earned Income credit?

I have everything documented, I have completed the returns for these families for years. I just stress out over the new penalties for preparers as I always make sure I complete the returns honestly and do the best job I can for my clients.
Thanks so much,
Jan

[appelman]

Did you really mean $30?

That translates to a whopping $9 of EIC! Wouldn't the daughter be better off claiming the EIC for her disabled brother? Aside from that, I don't know of any rule that prevent EIC being claimed by each of two families living in the same dwelling.

[mactoolsix]

The IRS has allowed 2 HOH same house

I think if you can document two separate income / expense streams, and can properly divide up the shelter expenses, it would fly. Here is a link to a CC Memorandum for two HOH same dwelling

http://taxes.about.com/gi/o.htm?zi=1/XJ&zTi=1&sdn=taxes&cdn=money&tm=344&f=21&su=p284.13.342.ip_&tt=13&bt=1&bts=1&zu=http%3A//www.unclefed.com/ForTaxProfs/irs-wd/1998/1998-041.pdf

Mike

[Gary2]

As I read the base question, these are two married couples, so HoH never enters the picture. There's no problem with both couples taking EIC as long as the dependency rules are met. The daughter can only claim her brother if the AGI requirement being greater than the parents' is met, but it's worth considering. Make sure there's due diligence on the disabled 39 year old; also, if there's any Social Security disability income (not SSI), that counts as support furnished by him unless you can show it wasn't used for support.

[appelman]

Gary, are you sure?

Or is SSI considered support provided by the state, i.e. by a third party?

[Gary2]

Or is SSI considered support provided by the state, i.e. by a third party?

SSI (Supplemental Security Income) is indeed support by the state. But Social Security Disability Income, which is reported on the same SSA-1099 as ordinary Social Security, is considered an asset of the recipient.

[appelman]

Good point.

I missed that distinction.

[jbinkley13]

Earned Income Credit

Thank you to everyone who responded. The $30 should have been $30K. I have always documented everything. I have the documents on the son who is disabled as well. I have been doing this families taxes for 9 years. They have kept very good records as well. I just wanted to make sure it would not be a red flag.

I have double checked everything and in my research I could only find the HOH in a situation like this.

Thank you again for taking the time to answer.

Jan

[mactoolsix]

As I read the base question, these are two married couples, so HoH never enters the picture.

Yes, I understood that. I merely posted the HOH link as a reference to a similar situation.

Mike