EIC for 67 year old brother

[Harvey Lucas]

My 52 year old client has a 67 year old brother that lives with him.

67 brother has a very small SS income only and is disabled.

52 client has wage job and earned about $19,000 in 2006.

It looks to me like 52 client can claim head of household status, can claim 67 brother as a dependent, and claim EIC for 67 brother.

Anybody disagree?

Thank You.
Harvey Lucas

[Brad Imsdahl]

Everything looks like a go to me, assuming the 52 year old is not married, and the 67 year old meets the permanently and totally disabled definition.

[Eli]

You know I never

actually thought about that. My Mom (76) lives with my sister year round. Mom is disabled. Sister earns about 18k+ yearly. I'm thinking I can amend 3 years and go for the EIC?? Thanks Harvey for bringing that up!!

Eli

[jainen]

William Wordsworth

>>My Mom (76) lives with my sister year round<<

I don't think William Wordsworth had Earned Income Credit in mind when he wrote, "The child is father to the man."

[Eli]

Jainen, I'm a little slow this morning...

>>

I don't think William Wordsworth had Earned Income Credit in mind when he wrote, "The child is father to the man."

please explain a little more clearly :-)

Thanks!
Eli

[jainen]

William Wordsworth

>>please explain a little more clearly<<

William Wordsworth was a 19th century English poet. Quite the stuff in his time, but a bit too romantic for anybody except college kids these days. I thought of his observation on how we grow up, when you posted your idea that a parent could be considered a qualified child.

[Eli]

I told you I was slow this morning!!

I just realized the stupidity of my post!!

Sorry!

Eli

[Gene V]

actually thought about that. My Mom (76) lives with my sister year round. Mom is disabled. Sister earns about 18k+ yearly. I'm thinking I can amend 3 years and go for the EIC?? Thanks Harvey for bringing that up!!

Eli

Sounds good, but your sister can't claim EIC, because your mother doesn't qualify under the rules of qualify child for EIC. Pub. 17 page 232 Rule 8.

[jainen]

will be true someday

>>the stupidity of my post<<

Not at all, friend! I thought it was a fabulous idea! Of course, if I had posted it Brad would have made me use the disclaimer, but it's right up there at the top of the tradition of ideas that could be true, are almost true, and probably will be true someday.

[Black Bart]

Oh, I wouldn't say that.

...a 19th century English poet...a bit too romantic for anybody except college kids these days

Though nothing can bring back the hour
Of splendour in the grass,
Of glory in the flower;
We will grieve not, rather find
Strength in what remains behind.

-- William Wordsworth

[ChEAr$]

Who would have thunk it?

Everything looks like a go to me, assuming the 52 year old is not married, and the 67 year old meets the permanently and totally disabled definition.

A 67 year old sibling being a "qualifying child", or even a child.

Learn something every day.

[Brad Imsdahl]

TTB page 11-5.

We usually think of the under age 19, or under age 24 and a full time student requirement. But the third one is any age if permanently and totally disabled.

[Koss]

Parent as Qualifying Child?

I certainly agree that in general, a parent, even if disabled, does not meet the definition of a qualifying child.

But as Jainen has observed, sometimes truth is stranger than fiction...

Those who have closely followed the long running debate over "unintended consequences" and "unexpected outcomes" of UDC are familiar with something referred to as the qualifying child paradox. Two brothers, ages 7 and 9, live with their second cousin all year, with no one else in the household. Assume that all requirements for qualifying relative are met (e.g., support, gross income, etc.). The cousin cannot claim these two children as dependents because each child is the qualifying child of the other. And you cannot claim a qualifying relative if that person is someone else's qualifying child.

Or so the argument goes. I think it's ridiculous. It is not what Congress intended, and it will not be interpreted this way by the courts.

And it's not about EIC, because the cousin wouldn't get EIC for a qualifying relative anyway. This bizarre outcome is about the dependent exemption.

But the debate can easily be shifted to EIC.

Some have suggested, in a rather arrogant and cavalier fashion, that the paradox of the brothers is a fairly unrealistic scenario, that does not often occur, and that if it did, the cousin would probably have custody of the children, which would then make each child a qualifying child of the cousin. The problem, it has been argued, is artificial, and the solution is transparent.

I beg to differ. The term custody is often used only in the context of divorce, and only with respect to natural parents. If the parents of these two siblings are dead, or incarcerated, and the cousin is the only one able and willing to care for them, the "solution" in many jurisdictions is not custody, but rather guardianship. Guardianship does indeed confer almost all the rights and responsiblities of parenthood.

Some of the most respected analysts at my firm have gotten behind the idea that the cousin in the example could simply petition the court for guardianship of the two brothers, and that the guardianship meets the definition of a foster child as the term is defined for purposes of UDC: "placed in your home by an authorized agency." Well, jeez, the probate court is an authorized agency, isn't it?

If this is the case, then doesn't this also provide a resolution for the canonical unmarried couple?

[Unmarried-couple-lived-together-all-year-kids-are-hers-but-not-his-and-he-is-the-sole-source-of-support]

If he is appointed as guardian of the children, they would then be considered his foster children, allowing him to claim them not only as dependents, but also for the Child Tax Credit. And as an extra bonus, they would now qualify him for Head of Household and EIC!

Or so we have been told by supposedly reliable sources.

Soooo...

If guardianship establishes a relationship that is equivalent, for federal tax purposes, to the relationship that is established between a foster parent and a foster child when the child is placed in the person's care...

And this relationship meets the relationship test for a qualifying child...

Why wouldn't this same relationship arise between an adult and his or her parent, if the parent is unable to manage their own affairs, and the adult is appointed guardian?

Here in Ohio, there are two types of guardianship: guardian of the person, and guardian of the estate. For this discussion, I am referring to guardianship of the person. Guardianship of the estate is purely fiduciary, and it is not unusual for one to hold one type of appointment without holding the other.

Guardianship of the person over a minor or incompetent adult does provide a degree of responsibility and control that is roughly equivalent to the concept of custody. It is not the same thing, however, and it is also not the same as placement of a foster child by an agency. There are vast differences between these various legal mechanisms.

But somehow our experts have decided that they all mean the same thing for UDC.

Why can't an incompetent parent, over whom I have guardianship, be considered a foster child?

If the guardianship makes me a foster parent for tax purposes, of a child who has no blood relationship to me, why wouldn't it apply equally to a parent? Or, for that matter, to an unrelated elderly adult?

There is no age limitation when the "foster child" is disabled...

And the guardianship, by definition, effectively proves that the parent is disabled, because it means that a judge has ruled that they are unable to care for themselves...

What's the difference?

Burton M. Koss

[jainen]

same for a conservatorship

>>Guardianship does indeed confer almost all the rights and responsiblities of parenthood.<<

I'm not sure about this, Burton. Biological parents do not lose their rights and responsibilities to a guardian, and a guardian does not become the parent in the eyes of the law. Still, a foster parent with even fewer rights and responsibilities than a guardian can treat the ward as a natural child, so why couldn't a guardian? And if so, what difference would actual age or relationship make? And would it be the same for a conservatorship?

[Koss]

Guardianship

>>Guardianship does indeed confer almost all the rights and responsiblities of parenthood.<<

I'm not sure about this, Burton. Biological parents do not lose their rights and responsibilities to a guardian, and a guardian does not become the parent in the eyes of the law. Still, a foster parent with even fewer rights and responsibilities than a guardian can treat the ward as a natural child, so why couldn't a guardian? And if so, what difference would actual age or relationship make? And would it be the same for a conservatorship?

You make a good point. My claim that guardianship is almost equivalent to parenthood may be too strong. A guardian can petition the court to be removed as guardian, and most judges will quickly come to the conclusion that if the guy doesn't want this responsbility, then it probably it isn't in the best interest of the child to force it. So a guardian can terminate the relationship pretty easily--something that cannot be said about parenthood.



While some natural parents have been known to voluntarily "give up" their children if they feel they cannot care for them or meet their needs, I think that process is a lot more complicated than the termination of a guardianship. The natural parent, as you have pointed out, has certain rights and responsibilities that are not so easily alienated.

With that being said, you are actually strengthening my argument. But you knew that anyway...

I haven't exactly asserted that guardianship meets the definition of a foster child for purposes of UDC. I honestly don't have a particularly strong opinion one way or the other. I do have clients who are taking this position. And yes, I am signing the return as the preparer. I think it is a reasonable position. (My clients are taking this position with respect to young children over whom they have guardianship--not parents or elderly adults.)

My point is a bit more subtle. Custody, guardianship, and foster parenting, in the labyrinth of state laws, are complex structures and concepts. They are certainly different, but they may overlap in various ways. But the tax code has been structured in a way that is often meant to be binary branching. Everything--well, not everything, but a lot of the tax system--is ones and zeros. Either the child is a qualifying child or it isn't. Either you meet the relationship test or you don't. Either it's more than half or it isn't more than half. There is no in-between; you can't be a little bit pregnant. Everything in the world is either elephant or non-elephant.

Once you take the position that a guardianship of a child satisfies the relationship test for purposes of a qualifying child, it appears to be a logical consequence that a guardianship over a disabled adult would also satisfy the relationship test. And the disabled status then eliminates the age limit.

One might argue that you are "begging the question." That is, the guardianship of a disabled adult arose because of the adult's disability, and that such a guardianship should not be interepreted in the same way as the guardianship of a child.

The problem with this argument is that would invalidate the guardianship of the child as well. The guardianship of the child arises because the child is too young to take care of himself.

The reasoning is a bit circular in both cases. Guardianship supposedly establishes the relationship that is required for a qualifying child--something that is somehow equivalent to a foster child. But the guardianship exists, by definition, for one of two reasons--either because the person is a minor, or because the person is an adult who is so disabled that they cannot take care of themselves.

So the guardianship, which creates a legal relationship that meets the QC relationship test, comes into being because the age/disability test is met.

I have one client who is the classic unmarried couple living together, and he has been appointed guardian of her child. So it is almost as if we are arguing that the foster parent relationship arises out of the facts and circumstances, and that the IRS will accept the existence of this relationship if it is recognized by the probate court in the form of a guardianship.

If this is so, then it follows logically that the same relationship could exist between a taxpayer and an incompetent 66-year old. And I don't see how it would make a difference if the 66-year old just happened to be the taxpayer's parent.

Burton M. Koss