Just a question

[Koss]

My original question was: why can't someone who is a dependent claim EIC if they have a qualifying child?

Your response was:

Because Section 32(c)(1)(B) in the context of who is eligible to claim the EIC says: “If an individual is the qualifying child of a taxpayer for any taxable year of such taxpayer beginning in a calendar year, such individual shall not be treated as an eligible individual for any taxable year of such individual beginning in such calendar year.

But what about someone who is a dependent but not a qualifying child? Like the girlfriend, who is claimed as a dependent by her boyfriend under the rules for a qualifying relative. She is not his qualifying child. She is his qualifying relative and therefore his dependent. IRS instructions say anyone who is a dependent cannot claim EIC.

Where does it say this in IRC 32?

Whenever it supports your argument, you use the term qualifying child interchangably with dependent. But when you find that the reasoning gets circular, or that the code conflicts with the IRS publication, you flip and say that someone can be a dependent without being a qualifying child, or a qualifying child without being a dependent.

The reason this is happening is because qualifying child means something different in each section of the code that uses the term. The meaning of the term dependent, for the most part, never changes, except when they decide to use it another code section and peel away part of its definition in the process.

[veritas]

Boyfriend should marry girlfriend. End of problem. (Tax problem anyhow)

[Bees Knees]

But what about someone who is a dependent but not a qualifying child? Like the girlfriend, who is claimed as a dependent by her boyfriend under the rules for a qualifying relative. She is not his qualifying child. She is his qualifying relative and therefore his dependent. IRS instructions say anyone who is a dependent cannot claim EIC.

Burton,

The IRS instructions DO NOT say anyone claimed as a dependent can't claim EIC.

The IRS instructions DO say that if you do not have a qualifying child, and someone claims you as a dependent, then you can't claim EIC.

In the case of a girlfriend who is claimed as a dependent by her boyfriend under the qualifying relative rules, and she herself has a qualifying child, the boyfriend gets the dependency exemption for her, and she gets EIC for her child.

And you won't find any IRS instruction that says she can't claim EIC.

[Bees Knees]

Keep in mind, the only time this will work is when the mother makes less than $3,200 and has a qualifying child. If she does not have a qualifying child, and she is claimed by her boyfriend as a dependent, then she can't claim EIC.

[Safire]

Page 25 of Pub 17

Page 25 says "You cannot claim any dependents, if you could be claimed as a dependent by another taxpayer."

If the g/f can be claimed as a qualifying "relative" of the b/f, then the child is no longer a qualifying "child" of the g/f and becomes a qualifying "relative" of the b/f.

I really don't think they ever intended for it to become this complicated.

[Bees Knees]

Page 25 says "You cannot claim any dependents, if you could be claimed as a dependent by another taxpayer."

If the g/f can be claimed as a qualifying "relative" of the b/f, then the child is no longer a qualifying "child" of the g/f and becomes a qualifying "relative" of the b/f.

I really don't think they ever intended for it to become this complicated.

The pub does not say the qualifying child of the girlfriend stops being a qualifying child of the girl friend because she can't claim the child as a dependent. The child is still her qualifying child, thus, making the child ineligible for the boyfriend to claim as a dependent.

Show me in the code where it says a qualifying child is only a qualifying child of someone who claims such child as a dependent.

[Bees Knees]

For that matter, show me in any IRS pub or literature that links the definition of a qualifying child as someone actually claimed as a dependent.

I already have demonstrated that there are numerous references in the code that identify a qualifying child under section 152(c) that are NOT necessarily eligible to be claimed by the taxpayer as a dependent.

[Safire]

Support Test

I think the problem lies in the wording of the support test for qualifying child. Remember that to claim anyone as a dependent, the taxpayer has always had to provide more than half of that persons support. If the g/f had no income, there is no way that she could have provided over 1/2 of the childs support, thereby disqualifying the child as hers.

They really screwed up royally on this one in my opinion.

[abby]

no longer required except for qualifying relative

I believe it is no longer required that you provide half the support for a qualifying child, as long as the child doesn't provide at least half of his/her own support.

[Safire]

Pub 501

I agree Abby, but I think that wording came about because there were so many multple support situations, not to keep people who are actually supporting a woman and her child from getting a deduction. They should have been more clear about it.

Look at this example in Pub 501

Example 4—taxpayer who is a qualifying child.

The facts are the same as in Example 1 except that you are only 18 years old and did not provide more than half of your own support for the year. This means you are your mother's qualifying child and she could claim you as a dependent. Because of the Dependent Taxpayer Test explained earlier, you cannot treat your daughter as a qualifying child and cannot claim her as a dependent. Only your mother can treat your daughter as a qualifying child.

I think the key phrase here is "Because of the Dependent Taxpayer Test explained earlier, you cannot treat your daughter as a qualifying child"

[Bees Knees]

Look at this example in Pub 501

Example 4—taxpayer who is a qualifying child.

The facts are the same as in Example 1 except that you are only 18 years old and did not provide more than half of your own support for the year. This means you are your mother's qualifying child and she could claim you as a dependent. Because of the Dependent Taxpayer Test explained earlier, you cannot treat your daughter as a qualifying child and cannot claim her as a dependent. Only your mother can treat your daughter as a qualifying child.

I think the key phrase here is "Because of the Dependent Taxpayer Test explained earlier, you cannot treat your daughter as a qualifying child"

No, the code does not say "you cannot treat your daughter as a qualifying child and cannot claim her as a dependent." Section 152(b)(1) says "If an individual is a dependent of a taxpayer for any taxable year of such taxpayer....such individual shall be treated as having no dependents...."

Note the phrase "treated as having no dependents." That is right out of the code. A dependent is treated as having no dependents. It does NOT say a dependent is treated as having no qualifying child.

If that were true, then a person claimed as a dependent could not claim EIC on a qualifying child. But a dependent CAN claim EIC on their qualifying child provided they themself are not a qualifying child of someone else. For example, the girlfriend making $3,000 at a W-2 job with a qualifying child can claim EIC on her qualifying child even though her boyfriend claims her as a dependent.

She can do that because her child is still her qualifying child, even though she can't claim her qualifying child as a dependent.

[Safire]

dilema

Ok, so the code says one thing and the instructions say another, what average American preparing their own taxes will ever see the IRS code book? How could the IRS deny a position taken on a return, that was clearly within the guidelines of the instructions published?

[Bees Knees]

IRS Pub 501 Example 4 illustrates the point that because the 18 year girl is a qualifying child of her mother, then she can’t treat her own kid as a qualifying child for any of the 5 tax benefits. That is not the same thing. We are talking about a boyfriend claiming his girlfriend as a dependent under the qualifying relative rules. If the boyfriend somehow could treat his girlfriend as a qualifying child, she could no longer treat her own child as a qualifying child, thus, the boyfriend would then get to treat her child as a qualifying relative.

[Safire]

So you are saying that the Dependent Taxpayer Test only applies in a situation where a qualifying child has a qualifying child?

I see that example as clearing things up a bit. For me at least. They didn't say, "because the daughter was a qualifying child AND because of the Dependent Taxpayer Test".

They simply said, that because of the Dependent Taxpayer Test explained earlier, that she could not count her child as a qualifying child. Why would it matter who claimed her? The fact that she is claimed as a dependent is the main thing that causes her to not be able to consider her child as a qualifying child.

It really seems pretty cut and dry to me.

[Bees Knees]

Why would it matter who claimed her? The fact that she is claimed as a dependent is the main thing that causes her to not be able to consider her child as a qualifying child.

For purposes of the dependency exemption, simply being a dependent of someone else makes you ineligible to claim someone as a dependent. That is found at Section 152(b)(1).

For purposes of the EIC, being a qualifying child of someone else makes you ineligible to claim your own qualifying child for EIC [Section 32(c)(1)(B)], and simply being claimed as a dependent makes you ineligible to claim EIC if you have no qualifying child. [Section 32(c)(1)(A)(ii)(III)]

Section 32 lists these two exceptions to the eligible individual rule for a reason. If merely being claimed as a dependent made you ineligible for claiming EIC, why would both of these exceptions need to be listed in separate code sections?

The reason is there is a loophole for someone claimed as a dependent under the qualifying relative rule. In that case, if you have a qualifying child, you get EIC, even though you are claimed as a dependent. There is no Section 32 exception that makes you ineligible for that.

So that is a perfect example of why you can’t tie the definition of having a qualifying child to whether or not you are claimed as a dependent by someone else. Because there are exceptions to the rule.