I Hate Dependent Laws

[erchess]

I will condede for the record

that several of you are correct in pointing out that legally the mother of a child is not supposed to sign away the dependency exemption for her child to anyone except the father of the child and then only if he legally qualifies. The rule is often broken and I never hear of any enforcement efforts, but the rule several of you spoke of does exist.

[New York Enrolled Agent]

I support your reasoning here. And if you follow your own reasoning, (child is QC of both parents), how do you stop short of applying the appropriate test? Inst for 1040 p. 17 right hand col.

BP
I thought we were going to agree to disagree.

Actually, let me nuance the words before I get ready to watch the Super Bowl and HOPEFULLY, see the New York Giants get a victory!!!!!!!!!!!

Seriously, I think our difference hinges on the word "claim". IRS Notice 2006-86 discusses this issue when one or more claim a q.c. as a DEPENDENT. I don't think using the child for purposes of §2(b) is "claiming" the child - that's why Bob is going to enter the child's name on the line by box 4. The headnote of this Notice says when a dependent is claimed by more than one taxpayer.

I'll post a snip of Notice 2006-86 (Caps added):

Except to the extent that § 152(e) applies, under §152(c)(4), when more than one taxpayer CLAIMS a child as a qualifying child {as a dependent - I'm adding this modifier}, the child is treated as the qualifying child of only one taxpayer for all the provisions that employ the uniform definition of a qualifying child (head of household filing status under § 2(b), the child and dependent care credit under § 21, the child tax credit under § 24, the earned income credit under § 32, the exclusion for dependent care assistance under § 129, and the dependency deduction under § 151). This rule is applied to these provisions as a group, rather on a section-by-section basis.

I'm posting a portion of the law (i.e. the IRC) - §2(b). I tried for simplicity sake to only paste the relevant portion (Caps added):

(b) Definition of head of household.

(1) In general.
For purposes of this subtitle, an individual shall be considered a head of a household if, and only if, such individual is not married at the close of his taxable year, is not a surviving spouse (as defined in subsection (a) ), and either—

(A) maintains as his home a household which constitutes for more than one-half of such taxable year the principal place of abode, as a member of such household, of—

(i) a QUALIFYING CHILD of the individual (as defined in section 152(c), determined without regard to section 152(e)), but not if such child—

(I) is married at the close of the taxpayer's taxable year, and

(II) is not a dependent of such individual by reason of section 152(b)(2) or 152(b)(3), or both, OR

(ii) any other person who is a dependent of the taxpayer, if the taxpayer is entitled to a deduction for the taxable year for such person under section 151 , OR

(B) maintains a household which constitutes for such taxable year the principal place of abode of the father or mother of the taxpayer, if the taxpayer is entitled to a deduction for the taxable year for such father or mother under section 151 .

I stand to be corrected but I fail to see any requirement that the q.c. be a dependent. If I'm missing something please let me know. I've looked at the rest of §2 and see no other references to §152(c) where the q.c. is defined. Look at the IRC and let us know your thoughts.

[Bees Knees]

Although this is not new here is a client's situation:

Unmarried TPs(boyfriend/girl friend) have a child. They live in his house (homeowner) for 8 month. Girl friend moves back with her mother in beginning of September. He makes 90,000 and girlfriend approx 11,000. Baby stays with Girlfriend. Girlfriend is at boyfriends house 4 or 5 days a week, sometimes with baby and sometimes without.

How should the boyfriend file>>Single, HOH without baby, HOH with baby, or what.

Girlfriend may want to file HOH with baby, I don't know yet. On her low income she would have a hard time qualifying for HOH in any case. Boyfriend gave all support whether in his home or at girlfriend's mother's house (200 per week while at mother's house).

Help????????????????????

Sorry, I did not read the rest of this thread. Not enough time.

If boyfriend is father, and girlfriend is mother, and baby is in same house as father and mother over half the year, the baby is a qualifying child of both and tie breaker rules apply (TTB page 3-17).

The chart on page 3-18 assumes you won the tie breaker rule, if two people would otherwise qualify for HOH. That is why it asks if the person is claimed as a dependent on pages 3-14 and 3-18. The tie breaker rules do not allow you to give the exemption to one parent and HOH to the other parent, unless the rules for divorced parents apply.

That is also why the only time the 5 benefits are split between mom and dad in the chart on pages 3-16 and 3-17 is when the rules for divorced parents kick in. All of the other scenarios have the benefit consistently going to only one person.

I think that might be what is confusing you here.

[Jesse]

I don't think so, if mom is not eligible for HOH, then she would file single, dad would also
file single--no one gets HOH. That's the way I read it.

This is how I read it as well.

Had similar situation - EIC last year w/ parents actually divorced and still lived together for part of the year- he paid maintenance but couldn't claim all becuasue lived together......blah, blah, blah......She went to HRB he came to me......blah, blah, blah.......after too many hours I think we had it figured out, but way too time consuming and messy. If I had it to do over again -- I WOULDN'T!

[BOB W]

This scenario is only good if she takes EIC that is when the other person cannot take any of the six benefits unless he or she has a different qualifying child.

signing out-have a client coming in.

Thanks Gene for your time, as well as BP, NYEA, Jesse ( did I miss anyone?). What a horrible way to spend this much time on a $200 tax return............ I guess in the long run it has major benefits to all. I'm still not sure what I am doing because I don't know what the Mother is doing with her return yet.

[Gene V]

So IRS's flow chart is wrong??? Or at least incomplete......?

This scenario is only good if she takes EIC that is when the other person cannot take any of the six benefits unless he or she has a different qualifying child.

signing out-have a client coming in.

[BOB W]

I don't think so, if mom is not eligible for HOH, then she would file single, dad would also
file single--no one gets HOH. That's the way I read it.

So IRS's flow chart is wrong??? Or at least incomplete......?


Koss or Bees feel free to jump in at any time.............................................. ..

[Gene V]

Does it make a difference that Mom is not eligible for HOH?

I don't think so, if mom is not eligible for HOH, then she would file single, dad would also
file single--no one gets HOH. That's the way I read it.

[BOB W]

I haven’t study all the above posts. However, I'm thinking, if mom takes the dependency and gets EIC, then dad cannot take H of H. Per Pub. 17 page 236 Rule 9.

Does it make a difference that Mom is not eligible for HOH?

Added: This post is out of sequence, sorry.

[tpert]

I wouldn't choose HOH for dad w/o dependent here.

I totally agree that this is the correct handling for this scenario.

Although I disagree with their basis for it, the IRS has repeatedly held that there is only one scenario where two parents can split the five benefits of a QC. If this is a QC of both, only one parent may qualify for all five benefits, which includes HOH.

[Jesse]

I haven’t study all the above posts. However, I'm thinking, if mom takes the dependency and gets EIC, then dad cannot take H of H. Per Pub. 17 page 236 Rule 9.

I think Gene is correct here.

BP is correct in that first you have to define if this is a qualifying child of BOTH parents.

If QC of both and Mom takes child for credits Dad needs to go single. You can not split HOH and credits if both have same qualifying child.

Is this a QC for both parents? If the rule is decided by where the child physically resided for > than 6 months yes and tie breaker then would go to Dad because he has the highest income. If it is where physically resided for the greatest amount of time, then tie breaker goes to Mom.

Burton Koss where are you?

[Gene V]

I haven’t study all the above posts. However, I'm thinking, if mom takes the dependency and gets EIC, then dad cannot take H of H. Per Pub. 17 page 236 Rule 9.

[BP.]

I am in agreement that the rest of the language of Test 2 item 1(a) itself doesn't apply, as you demonstrated. But we still have to define a QC first. That's the starting point, right? Or else what's the point of the rule for QC of more than one person?

So we're reading through these tests, and we have to see if we have a QC ("as defined in step 1 p. 15") So I would go through the steps I outlined. (1040 inst p. 15, then p. 17)

At this stage we'll agree to disagree . I wouldn't choose HOH for dad w/o dependent here.

[New York Enrolled Agent]

OK, 1040 inst, p. 13, going through the tests you mention. Going in numerical order under test 2, let's back up from item 2 to item 1(a), which parenthetically has us reference p. 15 to define a QC. OK, flip to p. 15, we get to the bottom of our chart to see we need to go to p. 17 if we have a child who is the QC of more than one person. And there we are brought to our rule. Spelled out for us. How do you reconcile this rule and still give dad HOH?

I don't think you can "go back" to item 1(a).

First, the IRC §2(b) doesn't require the child to be a dependent. That's enough for me.

However, for purposes of our dialogue, let's go back to item 1(a). Item 1(a) is NOT APPLICABLE in this discussion. Item 1(a) refers to the special rule in §152(e). The facts of the original post PROHIBIT use of that special rule. The parents were never married and did NOT live apart for the last 6 months of the year. Thus §152(e) does NOT apply. Thus, IMO, item 1(a) is not relevant to this discussion.

Page 13 - Test 2 says that ONE of the following must hold. Either item 1 OR item 2 OR item 3 OR item 4. Bob's taxpayer dad satisfies the condition of item 2. Item 1(a) does not apply.

[BP.]

Since the child satisfies all 4 of the requirements with respect to both mom & dad, the child is a qualifying child of both parents.

I support your reasoning here. And if you follow your own reasoning, (child is QC of both parents), how do you stop short of applying the appropriate test? Inst for 1040 p. 17 right hand col.