Uniform Definition of Children

[Unregistered]

Confused about the new rules.
Two people living together, unmarried. Two children umder 18 living in home. Adult #1 has income of $25,000.. Adult # 2 has 0.00 income. Children are birth children to Adult #2. There is no relationship to Adult #1 to the children.
Can Adult #1 claim the children for dependency as an "other" relationship. Or are the children considered qualifying children to Adult #2 even though she has no income.
Assume everyone lived together the entire year.

[jainen]

entirely possible

Neither of the children is a qualifying relative to Adult #1, because they are qualifying children to their own parent also in the home. The new law does not have an income test for the parent. You might think a person that has no taxable income is not a taxpayer, but that is not true. It is entirely possible for such a person to have a filing requirement and even a tax liability. Yes, I'm sure someone will challenge it. Will that be you?

[WhiteOleander]

Thanks for rhe help. I think I'll wait to challenge until I finally get it all figured out. (ha ha)

[Snaggletooth]

Ignorance will Abound

I have heard from some folks that the IRS was going to define a "child" and that for purposes of personal exemption, head of household, EIC, etc. that a child is a child is a child uniformly across the board. This would end the confusion (sic) for 2005 and beyond.

I am the most ignorant, so if someone can respond (or give me a link for research), I'll be most grateful.

The fallout from all this, however, will be all the various myths on the street. "That's not what they told me down at HRBlock last year!!!" and many other versions of this...

[Donanita]

Chart

There is someone on the QF board that has a chart and will e-mail it to you.

[Unregistered]

Flow Chart

Tax Tools also has several flow charts.

[jainen]

a few key points

I really don't think we need to be anxious about this. There will be lots of charts around, but we will find that they mostly make it more complicated. Keep a few key points in mind and we will all do fine with the new law. The first point is that it's only about children. If the person is not a qualifying child, then the rules about dependency are completely unchanged (except for the slightly misleading new term, qualifying relative). You don't have to be related, and a child who is not a "qualifying child" under the new rules can still be a dependent under the old rules. Secondly, if a child is qualifying for more than one person, that's when you can look at the chart for the tiebreaker rules. It is not complicated. Third, although physical custody is one of the tests you can still use Form 8332 just like you always did. It's even easier now because you can use the divorce decree instead of the form. Finally, financial support is NOT a factor in dependency except if the child provides more than half himself, so you don't have to worry about nonsense like what the boyfriend claims to pay or the absent parent. And for EIC you still don't even worry about the kid's own income, the same as before.

[Brad Imsdahl]

There is someone on the QF board that has a chart and will e-mail it to you.

I will be curious to see what everyone thinks of our chart on page 3-16 in TheTaxBook.

[Lion]

Chart

Brad and your fellow co-authors,

I'm sure you don't want to give away the store; but teasing us, both current and potential customers, with your UDC chart (on Updates or emailed or...) might be to your advantage. In this, your premier year, you want to be known far and wide as quickly as possible as the ones who provide easy to use tax information. How better than with free samples? Anyone who shows your chart to a colleague will be advertising for you. Good luck in your venture, by the way!

[Brad Imsdahl]

We probably will put some stuff up for free…but, not for another month or so. We want to make sure all of our competitors are finished printing their products before we start giving away our best ideas.

[Lion]

Smarter than the average bear...

We probably will put some stuff up for free…but, not for another month or so. We want to make sure all of our competitors are finished printing their products before we start giving away our best ideas.

Well, yes, you are smarter than the average bear. You should wait until your competitors have gone to press. Looking forward to some sneak peeks on Updates soon, though.