Discussion:EIC and dependency
From TaxAlmanac
Discussion Forum Index --> Tax Questions --> EIC and dependency
| 26 January 2006 | |
| Can a couple that lives together and are unmarried that have children together "split" the dependency and EIC? I am pretty sure that they can but just want to clarify. By splitting the two I mean one claims as a dependent for the exemption and child tax credit and the other one for the EIC. | |
| 26 January 2006 | |
| Since children are qualifying for each parent, they can agree which child each parent will claim. However, all the credits go with the dependency. No splitting of the credits. | |
| 26 January 2006 | |
| Deanp,
It depends on the tax year involved. For 2004, the answer would be yes. For 2005, the answer would be no. | |
| 26 January 2006 | |
| I was just reading on this site that for years after 2002 the parents may choose which one will claim the EIC. | |
| 26 January 2006 | |
| For 2004, one parent could choose to take the EIC and the other parent could take the dependency exemption.
For 2005, the taxpayer's must decide on who will claim a "qualifying child". Once that decision is made, that child will be the qualifying child of that parent for all tax purposes. This means that the child will be the QC for EIC purposes, dependency exemption purposes, child tax credit purposes, etc. This concept is brand new (Uniform Definition of a Qualifying Child). | |
| 26 January 2006 | |
| I don't believe that dependency is a test to be able to qualify for EIC. Also, in this case, only the parent with the higher AGI can claim the child for EIC. | |
| 26 January 2006 | |
| The 2nd part of my statement above pertains to the tiebreaker rules? | |
| 26 January 2006 | |
| Riley2: I don't find that you have to be able to claim someone as a dependent, in order to claim them for EIC? Why couldn't one parent claim the dependency exemption as well as the child tax credit and the other parent claim the EIC? I thought that could be done. I read your post above, and read the topic on the IRS site, but it's not clear | |
| 26 January 2006 | |
| Found a reference to this in Pub. 596, rule 9 discussion, where it talks about only one being able to take all the credits, dependency, Child Tax Credit, EIC, etc. Is there somewhere else where it talks about this? | |
| 26 January 2006 | |
| Ok, so now I am totally confused.
1) If a father and mother live apart and have a child that lives with the mother. The mother can claim head of household and the EIC but the father can claim the child credit and the exemption and the child care? 2) A father and mother live together all year and have a child. One can cliam the all 5 or nothing? | |
| 26 January 2006 | |
| Answer is in the link to the IRS page that Skhyatt left in his answer
See above--Orlando | |
| 26 January 2006 | |
| See Pub. 17, page 27, "Special Test for Qualifying Child of more than one person". This seems to make it clear that only one TP can claim any or all of the benefits with a qualifying child. Can't be split. Comments? I still have not been able to find this in the code. Riley2, can you point me there? | |
| 26 January 2006 | |
| Now I see it Skhyatt, but then I read on FAQ that a person does not need to be claimed as a dependent to qualify for the EIC. This seems to be conflicting. Am I reading this wrong? | |
| 26 January 2006 | |
| I need to clarify my previous comments. In the case of two parents who either reside together or are married, a qualifying child is treated as such for all tax purposes. Thus, there would be no splitting of benefits allowed.
However, in the case of a qualifying child of a divorced couple or an unmarried couple who do not reside with one another, the custodial parent must claim the child as a qualifying child for all purposes, except that the custodial parent may release the dependency exemption and the child tax credit to the noncustodial parent. Sec. 152(e), Sec. 32(c)(3), 2(b)(1)(A)(i), Sec. 24(c). | |
| 26 January 2006 | |
| In response to Deanp's question. There are only to instances in which a qualifying child for EIC purposes would not be also be a dependent: (1) When the dependency exemption is released to the non-custodial parent; and (2) When the qualifying child is self-supporting. See Sec. 32(c)(3)(A). | |
| 26 January 2006 | |
| Ok, thanks Riley. I think it is unfair in a way the way they have it set up now but that is neither here nor there. Probably done to discourage unmarried couples living together. I don't know. | |
| 26 January 2006 | |
| Deanp, I found exactly what Riley2 is saying in Pub.17, page 28 under "Applying this special test to divorced or separated parents" Thanks Riley2. | |
| 26 January 2006 | |
| Thanks all for the input. I have a much better understanding after re-re-re-reading the appropriate passages and making myself a list of the rules.
Dusty | |
| 26 January 2006 | |
| I guess I have a couple phone calls to make now. Learned a lesson there. | |
| 28 January 2006 | |
| Now, I want to have some opinions on this. Maybe I am reading this whole thing wrong, but it seems to me that this rule is set up to discourage people with children together from living together. Am I way off base here? | |
| 8 February 2006 | |
| Hi All,
I'm a newbie to all of this and am in a similar situation that's been described in this discussion..."qualifying child", dependent/exemption,...etc. My girlfriend and I had our 1st baby last year and now we're trying to figure out our taxes and the child tax benefits and they're definitely obscure. Can we split up the child tax benefits where I claim our baby as a dependent/exemption and me as the head-of-household and my girlfriend (worked part-time from home last year while pregnant as an indep. contractor) who had a low AGI claim EIC? It looks from what's been described above that this canNOT happen and that only ONE PARENT can claim the tax benefits involved w/ a "qualifying child"? UNLESS...we claim that we live APART?? Is this correct? Thanks! Mr. Confused | |
| 8 February 2006 | |
| So...for example, I can claim our baby daughter as a "qualifying child" and claim certain child tax benefits such as 'dependent/exemption', 'head-of-household', etc...while my girlfriend (iff she claims that we LIVED APART) can gather the 'EIC' benefits? And this "slight separation" of benefits can only be had if we...live apart, eh? | |
| 8 February 2006 | |
| No, it doesn't work that way.
If your girlfriend lived apart from you for the last 6 months of the year, and she had custody of the child for that period of time, then she would get the EITC and Head of Household filing status. However, you could decide amongst yourselves who would claim the qualifying child, by filing Form 8332. By filing Form 8332, your girlfriend would be releasing the qualifying child to you for purposes of the child tax credit and the dependency exemption. | |
| 9 February 2006 | |
| I am still struggling with this. Doesn't this open up the possiblity of people using a different address in order to split the credits? The whole wording of these rules seems vague to me. | |
| 13 February 2006 | |
| Talking about struggling...I've been trying to work w/ H&R Block's customer service asking the question as to whether or not I can file Form 8332 via their on-line e-file system and have spent many hours to no avail.
The remaining(?) question I do have on this issue is...can we use and file Form 8332 without any legal custody agreement docs? If so, can this be done...electronically? If any knows, thanks! | |
