Discussion:EIC and Dependents

Since she only had 1,200 in income (are will choose to claim her) it's probably better for you to claim the EIC, but can't know for sure since you did not mention your income.

However, if the girlfriend did not live with the boyfriend at any time during the last half of the year, then it would be possible for her to claim the EITC while releasing the dependency exemption to her boyfriend.

So, since I am not eligible, can she claim the EIC in respect to our child? Does the fact that she is a dependant on my return exclude her from the EIC completely? I read through Pub. 596 and still couldn't come up with an answer.

Thanks for the help!

Greetings to all.

Congratulations, WBChris, on your wedding, your new bride and your new baby.

In 2005, your girlfriend at the time earned only $ 1,200.00, and is to be claimed as a dependency exemption on your federal and state individual income tax returns for 2005. With these two facts, she does not have to file her own individual income tax returns for 2005, unless to claim any federal and state income tax withheld. Therefore, she does not need a dependency exemption, on the child, because she owes no tax and the dependency exemption is not refundable. However, the Earned Income Tax Credit is a refundable credit. Does the girlfriend qualify for an Earned Income Tax Credit? I would have to say no, because one has to have a base amount of earned income in order to qualify for the Earned Income Credit. For a taxpayer with no qualifying children, or dependency exemption(s), the Earned Income Base Amount is $ 5,220.00 for 2005. She only made $ 1,200.00 in 2005. Therefore, the girlfriend does not qualify for the Earned Income Tax Credit for 2005.

You mentioned that you would like to file as Head of Household for yourself on your 2005 federal and state individual income tax returns. Generally, you can file Head of Household if you were unmarried as of December 31, 2005, which you were, and maintained a home for your new child from the date of birth through December 31, 2005. The child must be a qualifying child. There are four tests that must be met, all four tests, to determine one as a qualifying child. They are as follows: 1 - Relationship Test - Your child is your naturally born child 2 - Residency Test - The child must have lived in your home for his/hers entire period of life in 2005. 3 - Support Test - The child did not provide more than half of his/her support. This is obviously true since the baby is an infant 4 - Age Test - The child must be under the age of 19, generally. Since your new baby was born recently, this test is met.

Since all four of these aforementioned tests are met, the new child is a qualifying child for WBChris, and WBChris is entitled to a dependency exemption for the new kid, and to file as Head of Household for 2005.

To file as Head of Household, with the girlfriend as the dependent, she must not be eligible to be a qualifying child of another taxpayer(s), like her parents. Since she is older than 25 as of December 31, 2005, she is not eligible to be a qualifying child of her parent(s). Also, there are five tests that need to be met, all five tests, to determine that someone is a qualifying relative. The five tests are as follows:

1 - Relationship Test - The girlfriend qualifies under this test, although not related to her boyfriend as of December 31, 2005, because she was a member of WB Chris's household for the entire year of 2005. 2 - Support Test - WB Chris should have provided more than half of his girlfreiend's support during 2005. From the facts, it seems that this test is met. 3 - Gross Income Test - The girlfriend had to have $ 3,200.00 or less in gross income during 2005. Since the facts state she only had about $ 1,200.00 of gross income in 2005, then this test is met. 4 - Citizenship Test - The girlfriend must have been a US citizen, or resident alien, as of December 31, 2005 5 - Joint Return Test - The girlfriend cannot file a joint return with anybody else.

If all of these five tests are met for the girlfriend, then she is considered a Qualifying Relative as of December 31, 2005. As such, WHChris can claim her as a dependency exemption and file Head of Household status.

Issues pertaining to divorce or separation are not applicable here because these two individuals were not married as of December 31, 2005. Don't start talking about divorce or separation when these two individuals just got married in February of 2006!

TurboTax computer software is not a substitute for sound, solid, professional, analytical advice from a Certified Public Accountant, who has the expertise, experience, knowledge, judgment, and resources to offer regarding federal and multi-state income tax laws.

Also, with all due respect, I think that referring a publication, and page numbers, to a client, or any other person, whether through the TaxAlmanac forum or any other forum, is the lazy man approach to offering advice, services and/or solutions. It is the duty for all Accountants, Enrolled Agents and Certified Public Accountants to do the tax research.

Thank you.

Very Truly Yours,

Angelo Liberati CPA, CFE Managing Member Accurate Accountants, CPA'S, LLC

Numbers Done Right...The First Time

Business Address: 20 Ford Court, Meadow Glen, Monroe, New York State 10950 - 4946

Business Telephone Number: (845) 782 - 5228

Business Facsimile Number: (845) 782 - 5582

Business E - Mail Address: meadowglenatmonroe@frontiernet.net

911...4 years...8 months...19 days...Always Remember...Never Forget

         Hey, Hey, USA...7 World Trade Center is here to stay