Eitc

[peggysioux]

Grandparents support both their daughter who is 19 in 2017 and granddaughter in 2017 and they both live with grandparents. Daughter had job for part of year but income was below the $4050. Parents claiming daughter as dependent. Daughter wants to claim her daughter for EIC purposes only. My research leads me to believe she can do that but Drake software is not allowing the EIC credit because daughter is being claimed as a dependent. I know that if the daughter were a qualifying child, the EIC would not be available. Am I missing something?

Thank you for your input.

Peggy Sioux

[kathyc2]

Grandparents support both their daughter who is 19 in 2017 and granddaughter in 2017 and they both live with grandparents. Daughter had job for part of year but income was below the $4050. Parents claiming daughter as dependent. Daughter wants to claim her daughter for EIC purposes only. My research leads me to believe she can do that but Drake software is not allowing the EIC credit because daughter is being claimed as a dependent. I know that if the daughter were a qualifying child, the EIC would not be available. Am I missing something?

Thank you for your input.

Peggy Sioux

Going this way no one would get the dependency and CTC for GD. Unless GP are phased out for CTC seems overall tax would be lower to forgo EIC and have GP claim both daughter and GD.

[peggysioux]

Eitc

Going this way no one would get the dependency and CTC for GD. Unless GP are phased out for CTC seems overall tax would be lower to forgo EIC and have GP claim both daughter and GD.

But if grandparents don't claim granddaughter, shouldn't the daughter be eligible to claim her daughter for EIC purposes only? Just want to make sure I am not missing anything as my software is not allowing it and my research is telling me she should be able.

Thank you.

[TaxGuyBill]

It seems like it would be allowable. However, that is such an extremely unusual situation, I doubt if Drake (or most other software providers) took that into account.

You may need to override and/or contact Drake Customer Support.

[Gene V]

[QUOTE=peggysioux;190593but Drake software is not allowing the EIC credit because daughter is being claimed as a dependent.

Thank you for your input.

Peggy Sioux[/QUOTE]

Peggy,
I'm not a Drake user, however, I have demo version, and it does allow the credit on my demo--make sure you go to screen 8867 and fill it out, I think then it will
work for you. I use (Lacerte) and it works fine.

[ATSMAN]

Grandparents support both their daughter who is 19 in 2017 and granddaughter in 2017 and they both live with grandparents. Daughter had job for part of year but income was below the $4050. Parents claiming daughter as dependent. Daughter wants to claim her daughter for EIC purposes only. My research leads me to believe she can do that but Drake software is not allowing the EIC credit because daughter is being claimed as a dependent. I know that if the daughter were a qualifying child, the EIC would not be available. Am I missing something?

Thank you for your input.

Peggy Sioux

Taxpayer is claiming their daughter not as a qualifying child (fails age test) but as a qualifying relative. So the daughter has already given up her exemption to her parents.

But the child's mother(age 19) is already claimed as a dependent on another person's return so I don't think she can qualify for EITC?

Is there any exception to this rule??

[peggysioux]

Peggy,
I'm not a Drake user, however, I have demo version, and it does allow the credit on my demo--make sure you go to screen 8867 and fill it out, I think then it will
work for you. I use (Lacerte) and it works fine.

I did complete the 8867, but there is a question in section 12 asking if the taxpayer is eligible to be claimed as a dependent on someone else's tax return. When I check "Yes", the EITC is not allowed. When I check "No", the EITC is allowed.

Peg

[Gene V]

I did complete the 8867, but there is a question in section 12 asking if the taxpayer is eligible to be claimed as a dependent on someone else's tax return. When I check "Yes", the EITC is not allowed. When I check "No", the EITC is allowed.

Peg

looks like checking "Yes" is correct answer--Grandparents paid support, etc.--actually not sure--support test doesn't come into play

[kathyc2]

I did complete the 8867, but there is a question in section 12 asking if the taxpayer is eligible to be claimed as a dependent on someone else's tax return. When I check "Yes", the EITC is not allowed. When I check "No", the EITC is allowed.

Peg

The question is not on the 8867, may be a worksheet for your software. If claiming EIC without a child, TP can not be a dependent on another return. But if claiming EIC with a QC, it says TP can not be a QC as opposed to dependent of someone else. So, it would appear the she qualifies for EIC.

[peggysioux]

Eitc

The question is not on the 8867, may be a worksheet for your software. If claiming EIC without a child, TP can not be a dependent on another return. But if claiming EIC with a QC, it says TP can not be a QC as opposed to dependent of someone else. So, it would appear the she qualifies for EIC.

That is what I determined as well so I will be calling Drake tomorrow to see what their take is on my issue.

Thank you.

Peggy Sioux

[ATSMAN]

looks like checking "Yes" is correct answer--Grandparents paid support, etc.--actually not sure--support test doesn't come into play

Support test does not come into play for EITC BUT I seem to recall that you can't be a dependent on another person's return and be able to claim EIC on your own return. Am I missing something here?

[peggysioux]

Eitc

Support test does not come into play for EITC BUT I seem to recall that you can't be a dependent on another person's return and be able to claim EIC on your own return. Am I missing something here?

Pub 596 states:

Rule 10—You Cannot Be a Qualifying Child of Another Taxpayer
You are a qualifying child of another taxpayer (such as your parent, guardian, or foster parent) if all of the follow-ing statements are true.
1.
You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. Or, you are that person's brother, sister, half brother, half sister, step-brother, stepsister, or a descendant of any of them.
2.
You were:
a.
Under age 19 at the end of the year and younger than that person (or that person's spouse, if the person files jointly);
b.
Under age 24 at the end of the year, a student, and younger than that person (or that person's spouse, if the person files jointly); or
c.
Permanently and totally disabled, regardless of age.
3.
You lived with that person in the United States for more than half of the year.
4.
You aren't filing a joint return for the year (or are filing a joint return only to claim a refund of withheld income tax or estimated tax paid).For more details about the tests to be a qualifying child.

So if dependent is a qualifying child then can't take EITC credit. But my taxpayer's circumstance is that dependent is a qualifying relative so should be able to take the EITC.

[Bonnie]

You cannot claim EITC if you are claimed as a dependent on someone else's return. Your software is handling the issue correctly. If parents claim the daughter then she is not eligible to get EITC for her daughter. She can file a return stating someone else claimed her and get back what she had withheld. Grandparents may as well claim granddaughter also. With income less than 4050 the daughter is obviously not providing half the support for the granddaughter.

Plus just checked EIC tables for 4000 of income and single the EIC is 1369. Grandparents will get 1000 CTC and an additional 405 if 10% bracket but they are probably in higher tax bracket than that. If 15% bracket then 608 besides the 1000 and if 25% bracket total benefit to grandparents would be 2013. So anyway you figure it (unless grandparents income in phase out for CTC), it would be more beneficial to have grandparents claim the grandchild.

[peggysioux]

Eitc

You cannot claim EITC if you are claimed as a dependent on someone else's return. Your software is handling the issue correctly. If parents claim the daughter then she is not eligible to get EITC for her daughter. She can file a return stating someone else claimed her and get back what she had withheld. Grandparents may as well claim granddaughter also. With income less than 4050 the daughter is obviously not providing half the support for the granddaughter.

Plus just checked EIC tables for 4000 of income and single the EIC is 1369. Grandparents will get 1000 CTC and an additional 405 if 10% bracket but they are probably in higher tax bracket than that. If 15% bracket then 608 besides the 1000 and if 25% bracket total benefit to grandparents would be 2013. So anyway you figure it (unless grandparents income in phase out for CTC), it would be more beneficial to have grandparents claim the grandchild.

Could you provide the reg or pub that you obtained that info. As noted in Pub 596, if a person is a qualifying child and dependent of another, then EITC cannot be claimed. But it does not say "if you are a dependent on someone else's tax return, you are unable to claim EITC.

Thank you.

Peggy Sioux

[peggysioux]

Eict

Instructions for 8867 state "if you do not have a qualifying child, then you are ineligible to take the EICT if you are a dependent of another. But different rules if you have a qualifying child.

Peggy Sioux