Form 8867 Part V.....leaning away from this client

[AZ-Tax]

I am getting vague answers from this single parent Sch C (only income) taxpayer who is vague on whether this taxpayer is actually financially supporting the dependent child. Taxpayer resides w/parents. The child is to young for school so I asked for medical bills w/both the taxpayers and child's name on it, no reply. When I asked about the Child care provider receipt, the reply was I pay cash and the babysitter does not want to give her name to me. Do not attend church. None of the other options in Part V 26 apply except N, "Did not rely on any documents" and I prefer not to mark that one. This taxpayers refund consist of Child Tax Credit & EIC for which the taxpayer paid not estimated taxes. On the bright side Part V 27, this taxpayer does have a form 1099. Your comments are appreciated.

Forgot to mention, this is a prospect. Not repeat client. I believe those additional questions on form 8867 began with tax year 2012 and in 2012 TY, I never had a taxpayer who qualified for EIC, who could not deliver a medical bill, child care provider etc. with the taxpayers name and dependents name on it.

[JohnH]

Does the prospect of a $500 penalty affect your perspective?

[David1980]

Is your only concern that the taxpayer did not support their child?

Line 26 covers two things. The residency of the child and the disability. The disability doesn't apply. Residency is not the same thing as support. The taxpayer need not spend a single penny on support and can still claim the child and get EIC. Probably the taxpayer's parents are helping out - but does it matter? Is there reason to doubt the child lives with the taxpayer? Maybe yes - maybe you tell the taxpayer that you can't prepare the return with the information provided. Maybe no - maybe marking that "Did not rely on any documents" box isn't the worst thing.

[AZ-Tax]

Dependent Child did live with taxpayer all of 2013

Is there reason to doubt the child lives with the taxpayer? Maybe yes - maybe you tell the taxpayer that you can't prepare the return with the information provided. Maybe no - maybe marking that "Did not rely on any documents" box isn't the worst thing.

I am confident the taxpayers dependent child did live with taxpayer for all of 2013.

[TaxGuyBill]

I am confident the taxpayers dependent child did live with taxpayer for all of 2013.

Then I don't see why you should hesitate for the qualifications of the EIC. If your hesitancy is support, remember that the requirement is that the CHILD did not support himself. The parent need not have provided the support.

On the other hand, the vagueness is a really concerning, ESPECIALLY with a Schedule C. That seems fishy to me. I would be more concerned about the income verification.

If taxpayer won't give you babysitter's information, then no Child and Dependent Care Credit.

[S T]

If you have determined all of the support for the child , etc sems like you are at a Schedule C income/expense which could be a concern

You know the "steps" to verify Sched C - so I would just go through those and document for your files. Bank stmts for income - receipts etc for Expenses.

The babysitter - well these go by the wayside - babysitter does not claim as income, but likewise, without T/p information for provider, ID# etc the t/p also is not able to claim as part of a support issue nor claim the dependency care credit when filing tax returns.

A lot of documentation and finding our "comfort zone" on filing for the EIC these days!

[AZ-Tax]

1099-Misc is legit

If you have determined all of the support for the child , etc sems like you are at a Schedule C income/expense which could be a concern!

I prepare the books for the Business that issued the 1099-misc. I appreciate the comments and I am now leaning towards accepting this prospect.

[taxxcpa]

Once I had a Schedule C client with low income. I answered NO to the question: does the income seem sufficient to support the taxpayer & dependent? My tax software did not use that as a disqualifier. I had to make another entry to indicate, No he does not qualify for EIC.

[ddoshan]

Once I had a Schedule C client with low income. I answered NO to the question: does the income seem sufficient to support the taxpayer & dependent? My tax software did not use that as a disqualifier. I had to make another entry to indicate, No he does not qualify for EIC.

Curious as to why he did not qualify.

[Gary2]

Repeat after me: "There is no support test for EITC."

The child can be self-supporting, claiming their own exemption, and the parent, if otherwise qualified, can still claim the child for EITC. The rule about not splitting the tax benefits only applies to two people claiming the same individual as a qualifying child.

[TaxGuyBill]

Repeat after me: "There is no support test for EITC."

The child can be self-supporting, claiming their own exemption, and the parent, if otherwise qualified, can still claim the child for EITC. The rule about not splitting the tax benefits only applies to two people claiming the same individual as a qualifying child.

Good catch. I missed that one.