Who Claims the Kid

[snowshoe]

Ok- sometimes the simplest things are the tripping hazards! I'm having a disagreement with another tax preparer- help straighten this non complicated thing out....

Mom & dad living with their small child all year, same household. Parents unmarried. Dad makes more. Handle finances like many households & co-mingle $$ and pay the bills, then blow what's left. =) One could argue that dad pays more or that they pay equal and use what's left of both for 'entertainment' type purposes.

Anyhow, one preparer says only dad can claim kid, hoh, ctc & he would likely not qualify for eitc. Other preparer says that the parents can agree on who claims everything (with possible exception of hoh), but including eitc & that tie breaker rules do not apply unless they don't have it worked out between themselves.

What say you?

[origun]

Qualifying child for both

It sounds to me like the child is a "qualifying child" for both parents. As long as they can agree, either one can take the dependency (and EITC). HOH is a different issue; person claiming HOH must have paid more than half the cost of maintaining home for child so probably the higher earning parent.

[AJsTax]

Form 88767

Look at form 8867, question 13a. If you follow that through with the information given above, the person with the lower AGI (tie breaker rules) loses and can not take the EIC. There is a parent with a higher income in the house. If the higher income is too high for EIC, no one gets it. Same rational as not going MFS to take EIC.

[snowshoe]

thank you- I will keep watch for discussion. I have read the 8867 & ask the dd questions. I have also read the pub (596?). There seems to some less than clear language. The pub also, describes such a situation and appears to say that either parent can claim child. Yes, I understand that this seems like it could be taken advantage of. Therein lies the issue. And the directions, pub & form aren't clear to me... on the issue of the parents having the option to decide who claims the child- then eitc may follow.

So, maybe they can decide to let mom claim them, but then no eitc?

[AJsTax]

Mom can take the child

Mom may take the child and the CTC but loses the EIC.

[David1980]

thank you- I will keep watch for discussion. I have read the 8867 & ask the dd questions. I have also read the pub (596?). There seems to some less than clear language. The pub also, describes such a situation and appears to say that either parent can claim child. Yes, I understand that this seems like it could be taken advantage of. Therein lies the issue. And the directions, pub & form aren't clear to me... on the issue of the parents having the option to decide who claims the child- then eitc may follow.

So, maybe they can decide to let mom claim them, but then no eitc?

Yes, it would seem the 8867 and Publication 596 contradict each other, wouldn't it. This scenario is basically the same as example 11 in the pub. The father has more income than mother. The pub indicates if father does not claim than mother can claim (including for EIC). How would you fill out the 8867 though? 13a would have to be yes. 13c would be no. If we go by what 8867 says, mother cannot claim. If we go by what 596 says, the mother can claim.

[mactoolsix]

From IRS page Qualifying Child of More Than One Person http://www.irs.gov/Individuals/Quali...han-One-Person

For all the benefits listed:

EITC,
Dependency exemption for the child,
Child tax credit,
Head of household filing status,
Credit for the child and dependent care expenses, and
Exclusion for dependent care benefits.

Tie Breaker Rules
The parent with the highest AGI if the child lived with each parent for the same amount of time during the tax year, and they do not file a joint return together;

Mike

[BP.]

Pub 17, p. 235 examples 11 & 12. Parents can agree that one will claim (#11), and tiebreaker is applied if both claim (#12.).

And Form 8867 on line 13 it says to see the instructions before answering. The instructions for line 13 allow for people who both qualify to choose which will claim. Reference to the tiebreaker is for the case when both claim.

[Earl]

Who claims the kid

See instructions for Form 8867 on page 2. The second paragraph above
the heading Line 14 tells what to do on line 13c.

[David1980]

See instructions for Form 8867 on page 2. The second paragraph above
the heading Line 14 tells what to do on line 13c.

Yes, but I'd say this is still confusing.

Subject to the rules just described, the taxpayer and the other
person(s) may be able to choose which of them treats the child
as a qualifying child. If the taxpayer allows another person to
treat the child as a qualifying child, check “No” on line 13c. For
examples and details, see Pub. 596.

We're doing the return for the "another person" who is going to claim the child as a qualifying child. It doesn't really say what to answer for the "another person"'s tax return. It stands to reason if the parent allowing the other person to claim the child answers "no" when they normally would have answered "yes" the same is true for the parent who normally would answer "yes". Which is of course why there's a mix of answers in this thread - the form and instructions both could be more clear. If it actually said "If the other person allows the taxpayer ... check "Yes" on line 13c" that'd be a little better.

In the end it doesn't matter, correct answer is the parent with higher income can choose to not claim and allow parent with lower income to do so. That's the important bit.

[appelman]

Parent with higher AGI...

Ok- sometimes the simplest things are the tripping hazards! I'm having a disagreement with another tax preparer- help straighten this non complicated thing out....

Mom & dad living with their small child all year, same household. Parents unmarried. Dad makes more. Handle finances like many households & co-mingle $$ and pay the bills, then blow what's left. =) One could argue that dad pays more or that they pay equal and use what's left of both for 'entertainment' type purposes.

Anyhow, one preparer says only dad can claim kid, hoh, ctc & he would likely not qualify for eitc. Other preparer says that the parents can agree on who claims everything (with possible exception of hoh), but including eitc & that tie breaker rules do not apply unless they don't have it worked out between themselves.

What say you?

...is entitled to all child benefits. He may waive ONLY dependency exemption and child tax credit to other parent under rules for divorced and separated parents, i.e by completing Form 8332.

[BP.]

...is entitled to all child benefits. He may waive ONLY dependency exemption and child tax credit to other parent under rules for divorced and separated parents

The parents lived together all year. How can the rule for divorced and separated parents possibly apply? The parents can choose who claims, Pub 17, p. 31, example 9.

[TaxGuyBill]

Assuming both parents don't claim the child, Form 8867 line 13c is "Yes" and either parent can claim the child for EIC and everything else (except maybe Head of Household).

http://www.irs.gov/instructions/i8867/ch02.html#d0e155

[AJsTax]

does not seem right.

Something missing here? Are you telling me that if the father makes 80,000 and the mother makes 15,000 and all the other factors are the same, the mother can take the child and the EIC? that does not seem right. And that is one reason I know the best thing that could be done for our tax system right now would to get rid of this welfare system we call EITC. I am glad very few of my clients qualify for it.

[ddoshan]

These situations can get confusing but it is really quite strait forward under the rules. If the parents are not married and live together all year and dad makes 80K and Mom makes 20K then yes mom can claim the child along with the CTC and the EITC. The tiebreaker rules only come in if both parents try to claim the child. Then dad would win.