Dependent question

[manyhappyreturns]

TP is single and lives with his grandmother and his young niece and nephew. The grandmother has custody of the children and cares for them during the day while TP is at work. Her only income is Soc Sec which is enough to support herself. She owns the house they live in and it is all paid for. TP works full time and supports himself and the 2 kids. I would think he can claim both kids as dependents as well as for HOH, CTC and EIC, because he pays their support, even though the grandmother has legal custody of the kids. Am I right?

[taxea]

TP is single and lives with his grandmother and his young niece and nephew. The grandmother has custody of the children and cares for them during the day while TP is at work. Her only income is Soc Sec which is enough to support herself. She owns the house they live in and it is all paid for. TP works full time and supports himself and the 2 kids. I would think he can claim both kids as dependents as well as for HOH, CTC and EIC, because he pays their support, even though the grandmother has legal custody of the kids. Am I right?

as a rule, two adults in one house, neither qualifies for HOH. You say you support your two kids. Do you pay FMV rent, your share of utilities, food, and other household expenses? You need to do a support worksheet for each member of the family. The total expense is divided by the number of members in the household. In this case you could percentage these items by 1/2 since each adult has two dependents. Be sure to include FMV of rent for the house. Grandma gets the property tax payments and other household expenses she alone pays.
Does she receive any state funds for the kids....that would go on her side of the support and be added to her SS income.

[mactoolsix]

You should walk through the Qualifying Relative rules - I think you'll find the kids could be a Qualifying Child of G'ma which would invalidate the Qualifying Relative for your client.

If G'ma decides to not claim the kids, client needs to pass the support test which would entail valuing the house (FMV rent).

The niece and nephew would then be a qualifying person for HOH, the child tax credit and EIC.

[taxea]

Mac-the way I read the OP, there are 4 children. 2 legally the Gma's and 2 the OP's. If Gma supports her two then there is no chance of HOH. The only way HOH may be used is if OP provides more support to everyone than Gma does for her two. If she files a return and provides the support for her two then HOH cannot be used by either.

[manyhappyreturns]

There are only 2 children, the TPs niece and nephew, who are also the grandmother's great grandchildren. The parents of the 2 kids are out of the picture. One is in prison and the other has a drug problem and lost her parental rights.

If the house is paid for and nobody pays a house payment or rent, I would think that there is no need to consider FMV of rent to figure support. Nobody pays anything for housing.

[Dusty2004]

I disagree

as a rule, two adults in one house, neither qualifies for HOH. You say you support your two kids. Do you pay FMV rent, your share of utilities, food, and other household expenses? You need to do a support worksheet for each member of the family. The total expense is divided by the number of members in the household. In this case you could percentage these items by 1/2 since each adult has two dependents. Be sure to include FMV of rent for the house. Grandma gets the property tax payments and other household expenses she alone pays.
Does she receive any state funds for the kids....that would go on her side of the support and be added to her SS income.

One of the adults will qualify for HOH when multiple adults live in the house with a qualifying relative. If either one qualifies in this situation will be a facts and circumstances situation.

Dusty

[David1980]

Nephew / Niece would fall under qualifying child for taxpayer. Taxpayer need provide $0 in support in order to claim the nephew and niece. Same is true for Grandma. Rule for qualifying child is qualifying child can't provide more than half their own support. https://www.irs.gov/publications/p17...link1000170876

Since both taxpayer and Grandma can claim the children as qualifying child and neither is the parent they can choose who will claim the child. https://www.irs.gov/publications/p17...link1000204278

With nephew/niece relationships to taxpayer the question I would ask taxpayer is where is mother and father of child - why are the parents not claiming the child? Especially if EIC is involved.

[taxea]

Mac-the way I read the OP, there are 4 children. 2 legally the Gma's and 2 the OP's. If Gma supports her two then there is no chance of HOH. The only way HOH may be used is if OP provides more support to everyone than Gma does for her two. If she files a return and provides the support for her two then HOH cannot be used by either.

Mac my apology...I read it wrong.

[taxea]

If G-ma has legal custody then TP should get signed F8332 and attach to his return. If she doesn't have legal custody then the parent/s need to provide the form.

[manyhappyreturns]

Grandma has legal custody. Dad is in prison and Mom is on drugs and lost her parental rights. I wasn't sure if an 8332 is needed, but of course it doesn't hurt. I was figuring that if Grandma doesn't claim them, it would go through, as long as we get the support thing settled.