Can I Do This?

[SueBaby]

I have a single mother that makes only $8,000 as here AGI. She goes to college and has Day Care for the baby.

She does not get any of here credits---Day Care, Education credit nor does she even get the Child Tax Credit. Is it because of her low income or 0 taxable income?

My question : Is it too much of money on her return for me to take both off and the parents to use them on their return for her to get ALL of her credits there? I don't want her to lose any credits like that at all because of whatever.

I can have exception as 0 and filing status as single. Or what do you suggust I do?

Thank you for any information on this matter.

[Koss]

Need more info

If all three live in the same household, then it is likely that the baby is the qualifying child of Mom and Grandma. This means they can agree who claims the baby as a qualifying child.

But Mom may also be a qualifying child of Grandma.

Is she under 24 and a full-time student?

Is she borrowing massive amounts of money through student loans, thereby providing more than half of her own support?

If Mom is a qualifying child of Grandma, then Mom must indicate that she is claimed as a dependent by another, and cannot take any credits or benefits, because a qualifying child cannot have a qualifying child, and a dependent cannot have a dependent. If this is the case, then Grandma gets two dependents and whatever other associated benefits she may be eligible for.

If Mom is essentially supporting herself, then Mom and Grandma can come to an agreement as to who claims the baby.

But if Mom is a qualifying child of Grandma, then it's clear that Grandma should claim both as dependents.

Burton M. Koss

[fliszt]

Sue, obviously I

don't know your income level, but something to consider. I do not charge any tax prep fee for single mothers making less than $28k. Nor do I charge students (college & hi-school). I also don't charge the elderly that live on s/s only plus small amount of interest income. Although I have a couple elderly clients that always send a check for $5 even though I tell them gratis. I then put their check in the shredder. Sue, I tell you this in case you may want to consider doing the same when you're able to do same. I'm Older Than Jack, and feel those folks probably need the income more than I do. But, when I was just starting out, I charged everyone with some discounts. Hope your season is successful.

[SueBaby]

If all three live in the same household, then it is likely that the baby is the qualifying child of Mom and Grandma. This means they can agree who claims the baby as a qualifying child.

But Mom may also be a qualifying child of Grandma.

Is she under 24 and a full-time student?

Is she borrowing massive amounts of money through student loans, thereby providing more than half of her own support?

If Mom is a qualifying child of Grandma, then Mom must indicate that she is claimed as a dependent by another, and cannot take any credits or benefits, because a qualifying child cannot have a qualifying child, and a dependent cannot have a dependent. If this is the case, then Grandma gets two dependents and whatever other associated benefits she may be eligible for.

If Mom is essentially supporting herself, then Mom and Grandma can come to an agreement as to who claims the baby.

But if Mom is a qualifying child of Grandma, then it's clear that Grandma should claim both as dependents.

Burton M. Koss

No they do not live in the same household. The parents just want to help her get more money back and so do I.

Yes, she is under 24 and a full time student. With that she had a W2 of $233 a 1099 for $1100 and unemployment for over $6000. With of course, with NO child support.

She only gets $434 on refund because of EIC, that's all. If I put both on her parents return she will owe about $200, but get lots more back with parents---that is the way I see it, but if it is not right to do, I will leave it like it is====which I think is wrong and I don't like to see happen.

I will keep trying until I know somehow she will get what she deserves!

[jainen]

Tax refunds

>>somehow she will get what she deserves<<

Tax refunds are based on tax law. Whether that is what anyone "deserves" depends on your political views.

Your single mother is already paying less than zero tax. She also got support payments from the government, and is probably eligible to have her education publicly funded as well.

[thomtax]

Agree with Jainen

While it might be nice for her to get more money from the government, and maybe needs it with me having sympathies for her situation, keep in mind when they get more handouts from the government, it is being paid by people such as yourself who are working and paying taxes. Remember - the government has no money, it merely has the ability to take money from you and redistribute it.

I admire your concern for your clients and wish you the best.

LT

[wv112]

If her parents claim her she may not qualify of any grants she might be receiving for school.

[Brad Imsdahl]

No they do not live in the same household. The parents just want to help her get more money back and so do I.

Yes, she is under 24 and a full time student. With that she had a W2 of $233 a 1099 for $1100 and unemployment for over $6000. With of course, with NO child support.

The baby cannot be a dependent of the grandparents because the baby does not live in the same house as the grandparents. Under the Qualifying Child test (TTB page 3-15), a qualifying child must be a member of the household (test 5). Therefore, the grandparents could only claim the baby under the Qualifying Relative test. And since the baby is a Qualifying Child of its mother, the baby cannot be a qualifying relative of the grandparents (test 5).

The mother of the baby is not a Qualifying Child of the grandparents either because the mother is not a member of the grandparent’s household. The mother also cannot be a qualifying relative of the grandparents because the mother made more than $3,300 in 2006 (test 6).

Therefore, even if the grandparents provided more than 50% total support for mom and baby, neither mom nor baby qualify to be dependents of the grandparents.

What kills the dependency deduction for both is the fact that mom and baby do not live in the same household as the grandparents. It would be totally different for both if they did.

[Black Bart]

Cases you'd rather not have

I have a single mother that makes only $8,000 as here AGI. She goes to college and has Day Care for the baby.

She does not get any of here credits---Day Care, Education credit nor does she even get the Child Tax Credit. Is it because of her low income or 0 taxable income?

My question : Is it too much of money on her return for me to take both off and the parents to use them on their return for her to get ALL of her credits there? I don't want her to lose any credits like that at all because of whatever.

I can have exception as 0 and filing status as single. Or what do you suggust I do?

Thank you for any information on this matter.

Such cases make you wildly unpopular with single mom's crowd -- I can hear the conversation:

Friend: You made how much?
SM: About $8,000.
Friend: And you're getting back what?
SM: $434.
Friend: That's around what I made and I'm getting back over $2,700 with my kid's credits. With your college expenses and babysitting and all, you should be getting back lots more than me. That woman must not know what she's doing.

Looking at the case (aside from Brad's post which effectively ends the debate), she doesn't really have any credits. Unemployment isn't considered earned income, so there's no significant EIC. Zero taxable income erases CTC, Child Care, and Education credits. To get Additional (refundable) CTC she has to earn over $11,300.

What usually happens in many of such cases is that everybody shuts up and the parents claim both of them, because that's the only way the family's going to come out with any real money. It's quite illegal, but (assuming nobody else is claiming them) it'll usually go right on through and whoever prepares it (knowingly or unknowingly) gets credit for being "a sharp tax preparer" and you/we get a black eye. But....them's the breaks!

[Brad Imsdahl]

When I was younger with idealism still flowing through my blood, I would spend valuable time with clients trying to educate them about why getting a refund is not a good thing since the government is using their money interest free…blah blah blah…

Now as I am older, I have come to the conclusion the public does not care. All they care about is why their friend got a $3,000 refund check while they had to pay in $200.

I have learned that people getting big refund checks are good for business. If they want to claim single zero, why would I want to spoil a good thing?

[SueBaby]

When I was younger with idealism still flowing through my blood, I would spend valuable time with clients trying to educate them about why getting a refund is not a good thing since the government is using their money interest free…blah blah blah…

Now as I am older, I have come to the conclusion the public does not care. All they care about is why their friend got a $3,000 refund check while they had to pay in $200.

I have learned that people getting big refund checks are good for business. If they want to claim single zero, why would I want to spoil a good thing?

Thanks to everyone for your help and information on this matter.

I guess I got too "wrapped" up in this case as a mother and grandmother NOT a preparer. That's NOT a good thing.

Thanks for being my SOUND BOARD!!!