EIC & Uniform Def of Child

[Unregistered]

I thought I had reached the conclusion that this new Uniform Defination of Child meant that whoever claimed or was entitled to the dependent exemption would get all allowable credits and no one else could claim any of these credits. That was untill I became aware of example 3, page 3-16, The Tax Book. I have a client who lives with her child at her mothers house for entire year. Grandma pay over half the cost of maintaining home. Mother pays over half cost of childs support. Mother signs over dependency to childs father. Under this proposition, is the mother: Fililng Status - Single
Dep Exemption - Dad
Child Tax Credit - Dad
EIC - Mother ???
Thank's for any and all help!

[Gretel]

EIC - my opinion

Since EIC is not tied to any kind of support, both grandma and mom qualify for EIC. If ma claims child for EIC grandma can not file HOH.

If they don't agree tie goes to mom.

[Safire]

I just looked this up today, and it seems to me that you cannot split the benefits. See page 232 of Pub 17. It basically says that if Mom and Grandma both have the same qualifying child, only one of them can use that child for the 5 tax benefits.

1. exemption
2. child tax credit
3. head of househould status
4. dependent care expenses
5. EIC

Some benefits will be lost as a result of these changes, and I guess we will have to look at each situation to see where the greatest benefit will be.

[Safire]

Apology

I didn't read through your scenario fully, you are right, in the case where the noncustodial parent gets the exemption, he also gets child tax credit, but not the other 3 tax benefits.

Either the Mom or Grandma can can claim EIC.

Won't this be fun to try to explain to our tax clients? I am thinking of placing bullet proof glass at the end of my desk for this one.

[pmedders]

EIC & Uniform Def. of Child

Anther what if....

Boyfriend and girlfriend live together and have a child that belongs to both. Child received social security benefits under fathers SS # due to disability. Mother has small income. Mother signs over dependency to boyfriend.

Would boyfriend be able to file HOH claiming child and mother.

Would mother be able to collect EIC?

[Safire]

Now in their case, as I see it, Father would have no need to file. No earned income to get any credit on. But Mother can file as Single with child and get a little bit of EIC.

Because they are the parents, the amount that the child gets from SS does not count against them.

[jainen]

tiebreaker rules

In the original post, child is QC to mom and grandma. If mom signs over the exemption to the absent father, grandmother would be excluded under the tiebreaker rules.

[taxmandan]

Boyfriend and HOH

Anther what if....

Boyfriend and girlfriend live together and have a child that belongs to both. Child received social security benefits under fathers SS # due to disability. Mother has small income. Mother signs over dependency to boyfriend.

Would boyfriend be able to file HOH claiming child and mother.

Would mother be able to collect EIC?

If the child is the boyfriends child, and he provided more than 50% support, then he claims the child as dependent, gets HOH status and all the credits. But since you say he, the father, is disabled, would he have reportable income?

[pmedders]

EIC & Uniform Def. of Child

Need to clarify info I gave earlier. I am told by parents that the child is disabled, but the S.S. benefit comes under the father's S.S. #. Father does work and has income; so child is QC for both parents. So if the mother signs over child to father to claim as dependent, can she file as single and claim child for EIC being she makes quite a bit less than father.

[Koss]

Can't sign over dependency

Anther what if....

Boyfriend and girlfriend live together and have a child that belongs to both. Child received social security benefits under fathers SS # due to disability. Mother has small income. Mother signs over dependency to boyfriend.

Would boyfriend be able to file HOH claiming child and mother.

Would mother be able to collect EIC?

The Rules for divorced or separated parents do indeed apply to parents that were never married, but only if they are living apart. If they are living together, Form 8332 is not only unnecessary, it is not permitted. It is unnecessary because the child is the qualifying child of both parents, and they can agree as to who claims the child. It is not permitted because, at least according to IRS pubs, Form 8332 is the only way you can split up the benefits, and this "division of beneifts" is only available to divorced or separated parents.



***
No, I haven't abandoned my position that certain parts of the new law are fatally flawed or have been substantively misunderstood by many tax pros and even the IRS. In response to this particular post, I am accurately explaining the IRS position. With that said, I think the IRS position may be in conflict with the tax code.

Burton M. Koss
koss@uskoss.net

https://www.usakoss.net