dependent and eic

[TAX4US]

ok I have tp(grandma) who supports her daughter and her 2 kids who do not live with her. Daughter did not work during year. Daughters boyfriend and father of the 2 kids also live in same house with daughter and worked to the tune of 6k for the year. Grandma made about 62K for the year.

I think grandma should claim as dependents the 2 kids and father would get the eic based on his income. I think it also possible that daughter may be claimed on Grandma's return.

Do I need a multiple support agreement signed?

Or am I way off base?

Many thanks as I seem to have a brain cramp this am.

[MDEA]

Dependent an eic

I think you are way off base. Does daughter receive food stamps or rent support? If so does the by friend show on the income reported to food stamps. You are entering into quagmire. Also are the daughter and children on medicaid? I deal with this situation a lot you must find out what government programs the people are on before taking dependents.

[kathyc2]

You can not split the 5 qualifying child tax benefits of HOH, exemption, child tax credit, dependent care credit and EIC unless both of the people splitting are parents - not grandparents.

Since grandkids did not live w/ g'ma, she would not qualify for HOH or the child tax credit. Since BF's income is such that he is not required to file return, g'ma may be able to claim qualifying relative exemption for daughter/grandkids is support test is met, but BF would then not be eligible for EIC.

[kathyc2]

Also, like MDEA pointed out, it g'ma takes them as dependents then she is responsible for health insurance and they likely would no longer qualify for Medicaid.

[TAX4US]

More research shows that Daughter gets food stamps$9600 for year and kids are covered under Health Insurance through Virginia Tamis Medicaid program. Grandma is providing no Ins but this could become a very sticky situation under the Medicaid program esp if I even put one of those kids on her return. I think best solution is grandma claims nobody and bf may be able to get the EIC only for the kids.

[Gary2]

I'll make it simpler:

If father claims the kids for EIC, that means they're his qualifying children. Grandma can't claim the kids as qualifying relatives if they're the qualifying children of someone else.

The fact that he's not required to file only helps if he doesn't file or files only to claim a refund of withholding.

[taxea]

how does Grandma qualify to take anyone that does not meet the live with rule?

[Gary2]

how does Grandma qualify to take anyone that does not meet the live with rule?

Grandchildren are in the list of "Relatives who do not have to live with you" to meet the QR test.

[FEDUKE404]

And to claim as a dependent. . .

Grandchildren are in the list of "Relatives who do not have to live with you" to meet the QR test.

I think, with the facts given and regardless of the fact that granny thinks she pays everything, the support test might present the greatest obstacle to her.

FE

[TAX4US]

I still think Gma and the ins and the Medicaid program may present a very ugly situation. If under Medicaid wouldn't they look to her for income in the verifying process? and under the Obama Ins Since Gma doesn't supply the insurance wouldn't she get caught up in that mess? Just thinking to myself.

I am still leaning to no kids for Gma because of the above statements.

I really didn't mean to open a can of worms., but TP's present all kinds of unique problems that nobody has completely thought out.

[kathyc2]

I still think Gma and the ins and the Medicaid program may present a very ugly situation. If under Medicaid wouldn't they look to her for income in the verifying process? and under the Obama Ins Since Gma doesn't supply the insurance wouldn't she get caught up in that mess? Just thinking to myself.

I am still leaning to no kids for Gma because of the above statements.

I really didn't mean to open a can of worms., but TP's present all kinds of unique problems that nobody has completely thought out.

I think everyone is in agreement that in no circumstance can g'ma claim exemption and BF claim EIC; it's one of the other. EIC for 2 kids at 6K of income is 2,410. Assuming g'ma is in 25% marginal rate exemption would be tax savings of 1,975. So, not only are most people saying BF claiming is the "most correct", it also yields the higher overall tax benefit.