Discussion:The Dreaded EIC

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Discussion Forum Index --> Tax Questions --> The Dreaded EIC

Walnut123 (talk|edits) said:

28 January 2006
My confusion deals with the changes brought about by the Working Families Tax Relief Act.

The scenario deals with divorced/separated parents. If the custodial parent gives the non-custodial parent the childs exemption via the 8332, does the custodial parent then lose the ability to take the EIC for this child? Publication 501 says the non-custodial would be eligible for all of the following- The exemption for the child. The child tax credit. Head of household filing status. The credit for child and dependent care expenses. The earned income credit.

Diego (talk|edits) said:

28 January 2006
Here is an IRS link with EIC e-tools and checklists that I find very helpful.


Riley2 (talk|edits) said:

28 January 2006
The custodial parent will be able to claim the EIC if he or she otherwise qualifies. The fact that the custodial parent releases the exemption under Sec. 152(e) does not affect his or her eligibility for the EIC. See Sec. 32(c)(3)(A).

The non-custodial parent will get the dependency exemption and the child tax credit, but not HOH filing status (unless he has a child or relative living with him for more than one-half the year).

Publication 501 does not say the noncustodial parent can claim HOH status. Instead the publication says that if a child is the qualifying child of two or more individuals at the same time (usually 2 adults in the same household), then the individuals can agree to allow one of the individuals to claim the child as a qualifying child. In the case to which you are referring, the child is a qualifying child of only one individual at a time – the custodial parent or, in cases where a release is signed, the non-custodial parent.

DianeOffutt (talk|edits) said:

1 February 2006

Thank you for providing this discussion group with the link EIC e-tools. I just went there and it is one great tool. I am going to put it on my website so my clients can check it out.

THANK YOU. I am SO glad I visited this site tonight.

Diane Offutt Accounting Connections, LLC Woodstock, Georgia http://www.accountingconnections.org

Diego (talk|edits) said:

2 February 2006
You are very welcome.

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