Discussion:Dependency Exemption/Credits for Great Grandchild?
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Discussion Forum Index --> Basic Tax Questions --> Dependency Exemption/Credits for Great Grandchild?
Discussion Forum Index --> Tax Questions --> Dependency Exemption/Credits for Great Grandchild?
| 6 November 2008 | |
| I'm reviewing a 2007 tax return for a new client who is being audited. I noticed that this elderly couple is claiming dependency exemption for 4 yr old great grand child.
I also noticed that they did not claim child tax credit. I get very confused about dependents in non-traditional families. A. Are great grandparents eligible to claim the exemption? B. If they qualify for the exemption, do they then qualify to claim child tax credit? What questions and answers should I ask client to get to proper tax treatment? | |
| 6 November 2008 | |
| Randy CPA EA, please tell us that you know the tests for a dependent. This is taught in every H&R Block basic tax course. They are even taught in every Jackson-Hewitt course, and we know how loosey-goosey they are.
Pub 17 would be a good refresher. I know my answer SOUNDS condescending, but it really isn't. It's a call for you to prove the worth of your credentials. | |
| 6 November 2008 | |
| Well, it depends upon your specialty. Illini is a retirement man. I got out of retirement planning myself when I finally realized that we would bottom out at Dow 5000.
Illini: generally, the less likely the parties seem to be related, the more likely you are to get the deduction. This is going to require some study on your part, and the outlay of the gas money to get to the public library. Go to your library, main branch usually, and check out the most recent J.K. Lasser. That should at least tell you how much you don't know, then bring it forward from there. Get out of that market business though, unless you are shorting everything. Whole life looks good to me however, for tax reasons, and because it's a contract and not an investment. P.S. Your library might have CCH Master Tax Guide also. Check reference section. Obviously, get a recent edition. | |
| 6 November 2008 | |
| Geez, I was only looking for a little discussion on what I think is confusing and would benefit others. Can I crawl under a rock now? | |
| 6 November 2008 | |
| Don't feel bad. I generally don't take clients with kids, or grandparents with grandkids. I discourage them!
Most of my clients are single. Now, some of them adopt, and catch me off guard. Then again, some of them will take in a runaway ever once in a while. So, manage your clients right, and you won't have this problem. There's some that enjoy solving this interminable puzzle of who is deductible or not. There are also discussions on here (that go on forever) that you can search in that little yellar box over there. | |
| 6 November 2008 | |
| Thanks JD. That's why I don't know much about it because I do discourage those kind of clientele. I used to be on a board, WAY back with this fellow -- he's a retired minister and he's a DIY preparer and got audited due to numerous math errors and deductions he should not have taken. All honest mistakes -- not a very sophisticated client. Any way, I took him on out of sympathy, not for income, that's for sure! The IRS auditor recommended him to me because I was fair and honest. | |
| November 6, 2008 | |
| CFS Software (www.taxtools.com) has some great flowcharts that help decipher the maze of who gets to claim a dependent. The flowcharts help summarize the verbage of Pub 17 and the Master Tax Guide. | |
| 6 November 2008 | |
| The test is easy. If the grandkids are providing more than half the support for the grandparents, then they can take the grandparets, even if the grandparents don't live with them (as long as the parents are dead, or have been missing for at least 7 years).
Better check what the other posters suggested, because remember, I joined AARP before they started selling insurance. | |
| 6 November 2008 | |
| My public apologies to Randy. In a private email, I pointed out the pages in Pub 17 which would help answer his question (starting on page 24 but especially Qualifying Child beginning on page 26). He did point out that this area changes often. | |
| 6 November 2008 | |
| Based on your client profile, the child tax credit is most likely phased out.
Per IRS The credit is limited if your modified adjusted gross income is above a certain amount. The amount at which this phase-out begins varies depending on your filing status: • Married Filing Jointly $110,000 • Married Filing Separately $ 55,000 • All others $ 75,000 | |
