Gray zone - dependent care

[FEDUKE404]

Unmarried couple lived together the entire year in an apartment rented for several years by male. Their child was born in early 2013. Now a three-person household. Wages of male for 2013 are roughly 8x those of female.

Likely scenario is dad gets HOH and personal exemption for child. Mom will file as single, and snag some EIC (for herself only) due to low income. Dad cannot claim mom as dependent due to her modest wage income.

Issue is their child was in dependent care during 2013. Both parents have irregular job hours due to work in medical field. Name on provider receipt is that of mom. It also appears costs may have been charged on her credit card.

Question: Can either mom or dad claim a tax credit via Form 2441? From all intents and purposes they consider themselves "a couple," but . . . .

FE

[appelman]

Seems pretty dubious...

...if person claiming the child isn't the one who paid the child care expenses.

Unmarried couple lived together the entire year in an apartment rented for several years by male. Their child was born in early 2013. Now a three-person household. Wages of male for 2013 are roughly 8x those of female.

Likely scenario is dad gets HOH and personal exemption for child. Mom will file as single, and snag some EIC (for herself only) due to low income. Dad cannot claim mom as dependent due to her modest wage income.

Issue is their child was in dependent care during 2013. Both parents have irregular job hours due to work in medical field. Name on provider receipt is that of mom. It also appears costs may have been charged on her credit card.

Question: Can either mom or dad claim a tax credit via Form 2441? From all intents and purposes they consider themselves "a couple," but . . . .

FE

[DonB]

have her claim child, eic, and dependent care and no one is hoh. spilled coffee on m ke board and some kes are no working---lol

[FEDUKE404]

Do what?

have her claim child, eic, and dependent care and no one is hoh. spilled coffee on m ke board and some kes are no working---lol

Right. . .ever review Form 8867 ??

FE

[DonB]

a confusing area-- see pub 596 Example 11—unmarried parents.

You, your 5-year-old son, and your son's father lived together all year. You and your son's father are not married. Your son is a qualifying child of both you and his father because he meets the relationship, age, residency, and joint return tests for both you and his father. Your earned income and AGI are $12,000, and your son's father's earned income and AGI are $14,000. Neither of you had any other income. Your son's father agrees to let you treat the child as a qualifying child. This means, if your son's father does not claim your son as a qualifying child for the EIC or any of the other tax benefits listed earlier, you can claim him as a qualifying child for the EIC and any of the other tax benefits listed earlier for which you qualify.

tiebreaker rules only apply when 2 people both claim he child and he irs ges in he fight.

[DonB]

[QUOTE=DonB;160880]

tiebreaker rules only apply when 2 people both claim he child and he irs gets in he fight.]

My take on this: Tiebreaker rules are used when two people cannot agree and both insist they will claim the child and EIC. We are to then inform them of the TB rules that will be imposed on them if they both proceed with their claim.

[FEDUKE404]

No tie to break here

[QUOTE=DonB;160893]

tiebreaker rules only apply when 2 people both claim he child and he irs gets in he fight.]

My take on this: Tiebreaker rules are used when two people cannot agree and both insist they will claim the child and EIC. We are to then inform them of the TB rules that will be imposed on them if they both proceed with their claim.

There is NO "tiebreaker" issue in this scenario. The facts fully support the father can/should claim the child's personal exemption and CTC and be eligible for head of household filing status. Or, stated differently, the mother cannot do so.

There is no dispute between the two parties.

The only real [tax] question on the table is how to handle claiming any dependent care expenses via Form 2441.

A reasonably good case could be made that neither the father nor the mother could claim said expenses when an exact reading of the rules is followed. Is there wiggle room??

I guess, in retrospect, the "client" of the daycare provider should have been the father and not the mother. But that cannot be changed after the fact.

Thanks for all posts so far.

FE

[DonB]

[QUOTE=FEDUKE404;160896]

The facts fully support the father can/should claim the child's personal exemption and CTC and be eligible for head of household filing status. Or, stated differently, the mother cannot do so.


FE

Why do you say "the mother cannot do so"?

He cannot take 2441 credit since he did not pay for the care.

[FEDUKE404]

Now I am the one confused here

Why do you say "the mother cannot do so"?

He cannot take 2441 credit since he did not pay for the care.

Well, for starters, the residence is rented by the father for several years, well before the girl friend or their child ever arrived on the scene. The father pays virtually all expenses for the upkeep of the household and the support of their child. The income of the father far exceeds that of the mother. It should be reasonably clear to a person with tax knowledge that the personal exemption for the qualifying child and the head of household status should go to the father. Dare I even think such "cannot" go to the mother?

Did I miss something from those basic Block tax classes a few (understatement!) years ago ? ? ? If so, with these facts, how exactly would you convince the IRS that the mother can legitimately claim HOH and separately claim the personal exemption for their child?? (Oh yes - even if the Form 2441 stuff evaporates, tax-wise the HOH/exemption/CTC are worth far more to the father than to the mother.)

FE

[ddoshan]

Likely scenario is dad gets HOH and personal exemption for child. Mom will file as single, and snag some EIC (for herself only) due to low income. Dad cannot claim mom as dependent due to her modest wage income.

Mom has a qualifying child .... don't think she can claim the EIC for herself.

[DonB]

If so, with these facts, how exactly would you convince the IRS that the mother can legitimately claim HOH and separately claim the personal exemption for their child??
FE

The interplay between Qualifying Child, Head of Household, EIC, Separated Parents, Parents never Married, and Tiebreaker rules can be very confusing. Reading previous threads and IRS pubs have turned me around on the issue you describe. I agree that mother cannot claim HOH because she did not provide over half of the cost of maintaining the household. To be a qualifying child, the child must live with you for over six months, and the child must not have provided over half of it's own support. Both of these tests are met in your scenario and if the father agrees, the tiebreaker rules are not used. Please re-read the example 11 in Pub 596.

[Will]

Well, for starters, the residence is rented by the father for several years, well before the girl friend or their child ever arrived on the scene. The father pays virtually all expenses for the upkeep of the household and the support of their child. The income of the father far exceeds that of the mother. It should be reasonably clear to a person with tax knowledge that the personal exemption for the qualifying child and the head of household status should go to the father. Dare I even think such "cannot" go to the mother?

Did I miss something from those basic Block tax classes a few (understatement!) years ago ? ? ? If so, with these facts, how exactly would you convince the IRS that the mother can legitimately claim HOH and separately claim the personal exemption for their child?? (Oh yes - even if the Form 2441 stuff evaporates, tax-wise the HOH/exemption/CTC are worth far more to the father than to the mother.)

FE

As Don said, reread Example 11 which fits this situation. As long as there is no dispute, the parents can decide who claims the child and the EIC. It makes sense that they will decide that the lower income parent would do so. Strange, but perfectly legal. (IF they cannot agree, the higher income parent gets it of course.)

[FEDUKE404]

It's ALL a matter of choice??

All right, now I am at least 100% totally confused.

Are you saying that, per Example 11, the father can choose not to claim the HOH status (file "single" instead), nor the child's exemption (claim only his own), nor the EITC for the child (he could not do so in the first place!) and "give" the HOH status and the child's exemption and (a greater) EITC to the girl friend?? This is the same girl friend who, with the actual facts at hand, cannot personally meet the requirements for either HOH or proving >50% support for the child.

I guess she can bring to the table she DOES have a "qualifying child" solely for EITC purposes.....or does she???

So, instead of a tiebreaker, it's more of a "who wants it?" scenario.

Good grief....and don't forget I'm the one who has to factually fill in Form 8867!!

Maybe they should just get married instead. . .

As a related question: Assuming there was NO child involved, but the scenario was exactly the same. The single non-mother would be entitled to a small EITC based upon her income alone. All requirements are fully met for legitimately claiming "her own" EITC. Now bring the child back into the picture: **IF** the male does claim HOH and the child's exemption (although it would be illogical for him not to do so), and obviously NOT claim the EITC on his return, does that mean the mom can then claim zero/nada/zilch EITC on her single tax return merely because she does (or does she?) have a qualifying EITC child which is not being claimed? The mere presence of the child, even though not being claimed by her in any way/shape/form, removes ALL of her (otherwise individual) EITC considerations???

Is there enough good bourbon in KY to make this go away??

FE

[DonB]

Are you saying that, per Example 11, the father can choose not to claim the HOH status (file "single" instead), nor the child's exemption (claim only his own), nor the EITC for the child (he could not do so in the first place!) and "give" the HOH status and the child's exemption and (a greater) EITC to the girl friend??

My understanding is yes to all of the above except she does not qualify for HOH. And without a dependent claimed, he does not qualify for HOH.



This is the same girl friend who, with the actual facts at hand, cannot personally meet the requirements for either HOH or proving >50% support for the child.

>50% support is no longer a factor for "qualifying child". The new rule is "the child cannot have provided over half of their own support".

I guess she can bring to the table she DOES have a "qualifying child" solely for EITC purposes.....

Yes, and exemption and if she qualifies, 2441 credit.


So, instead of a tiebreaker, it's more of a "who wants it?" scenario. Yes

Good grief....and don't forget I'm the one who has to factually fill in Form 8867!!

The 8867 is worded poorly for this scenario. Here is a quote from Intuit site, "So on the form 8867 you would answer that yes someone else could claim the child and the relationship on the next line but answer yes on 13c since they are in agreement. https://accountants-community.intuit...laim-the-child

Good Luck and have fun--


Is there enough good bourbon in KY to make this go away?? NO

[BP.]

The 8867 is worded poorly for this scenario. Here is a quote from Intuit site, "So on the form 8867 you would answer that yes someone else could claim the child and the relationship on the next line but answer yes on 13c since they are in agreement. https://accountants-community.intuit...laim-the-child

They can choose. No HOH for Mom. Base it on dollar benefit to whichever parent.

Form 8867, line 13 says to read the instructions. Instructions say they can choose, and if they do so, then answer "No" to line 13c.
(Meaning that if the Mom isn't claiming, then she can't get any EIC. This is stated on line 13. Or yes on Mom's if parents have agreed she can.)