EIC Question

[Ray]

I think this is an easy question but I don't do this combination often enough to be proficient.

I have a new client, mother who lives with the father but not married. She makes more than he does $26,000 and they have two children. Both lived in the same house all year.

I am thinking that she can claim one child with HOH and EIC and dad can file single with one child and EIC. Since support is not an issue is this valid??

Since it is taking advantage of the EIC I have a tendency to wonder if this my thinking is correct in this case.

Thanks for any help.

Ray

[Ray]

EIC Question - More information

Dad makes about $15,000, they rent and share expenses.

[winnie]

Don't do enough EIC, either

I am also interested in this situation.

[TMAC]

Tests

Relationship, age, residency. If they both meet those tests with different child they can each claim EIC

[Kram BergGold]

My thoughts

If they operate as one household, then only the one who provides more than 50% of the household expenses can be H of H. If they were two single adults just sharing a house they could both be H of H. If they are the biological parents of the two kids then I think if each takes one they get all the benefits- EIC, child tax credit, and dependent care credit but only one H of H.

[Black Bart]

I

If they operate as one household, then only the one who provides more than 50% of the household expenses can be H of H. If they were two single adults just sharing a house they could both be H of H. If they are the biological parents of the two kids then I think if each takes one they get all the benefits- EIC, child tax credit, and dependent care credit but only one H of H.

agree with this.

[BP.]

Ray, considering the income levels for each taxpayer, would dad not qualify for considerably larger EIC with 2 kids, than the combined EIC each taxpayer would get with just one child apiece?

$15,000 of income - two kids - EIC $4,716

$15,000 of income - one child - EIC $2,853

$26,000 of income - one child - EIC $1,161

I guess you have to look at all the numbers, as I am not factoring in CTC, ACTC, or the loss of mom's HOH filing status if dad claims the two kids.

[GIMoe]

Eic

Relationship, age, residency. If they both meet those tests with different child they can each claim EIC

If they operate as one household, then only the one who provides more than 50% of the household expenses can be H of H. If they were two single adults just sharing a house they could both be H of H. If they are the biological parents of the two kids then I think if each takes one they get all the benefits- EIC, child tax credit, and dependent care credit but only one H of H.

I agree with both statements above, they can each claim a child and get all the benefits (except HoH -- only one of them gets that)

Ray, considering the income levels for each taxpayer, would dad not qualify for considerably larger EIC with 2 kids, than the combined EIC each taxpayer would get with just one child apiece?

$15,000 of income - two kids - EIC $4,716

$15,000 of income - one child - EIC $2,853

$26,000 of income - one child - EIC $1,161

I guess you have to look at all the numbers, as I am not factoring in CTC, ACTC, or the loss of mom's HOH filing status if dad claims the two kids.

I definetly think it is worth the time to look at all your different options to get the best possible scenario for your client.

[BP.]

Mom can still use one of the children as a qualifying child for HoH status without claiming that child as a dependent. So, if it works out best for dad to claim both kids, mom can still claim HoH status. (Pub 17, Page 23, Table 2-1)

No, mom can't be HOH if dad takes both kids. See Pub 17, p. 28- Special Test for QC of More Than One Person. If the kids are the QC of both parents (they are) only one parent can claim all the benefits.

The scenario underlying the reference in Pub 17, p. 23, Table 2-1 is when the custodial parent allows the non-custodial parent to claim the custodial parent's QC with a Form 8332. The child in that situation is still a qualifying person for HOH for the custodial parent.

See TTB p. 3-17, footnote 6.

[GIMoe]

Oops...

No, mom can't be HOH if dad takes both kids. See Pub 17, p. 28- Special Test for QC of More Than One Person. If the kids are the QC of both parents (they are) only one parent can claim all the benefits.

The scenario underlying the reference in Pub 17, p. 23, Table 2-1 is when the custodial parent allows the non-custodial parent to claim the custodial parent's QC with a Form 8332. The child in that situation is still a qualifying person for HOH for the custodial parent.

See TTB p. 3-17, footnote 6.

BP,

You are absolutely correct!! I think I was taking a nap when I answered previously, I just did not read it all the way through. Thanks for setting me straight.