EIC question

[Tax Prep by Deb]

I have a client who has a unique situation.   She has a daughter who is 20 and was a full time student last year.   They lived together all year and would qualify for EIC.  The wrinkle is the daughter provided more than half of her own support. 

From what I see she would still qualify her for EIC purpose., as support is not a requirement correct? 

[BLACK BART]

Correct.  You're okay on the EIC since the income's irrelevant for that - living with mom and being a student are the things that count.

On the other hand, the "provided more than half of her own support" kills off the girl's dependency exemption for mom.

 

[Tax Prep by Deb]

That's what I thought.  So I will file the daughters return and have her claim her own exemption and mom will claim her only for EIC purpose. 

Thanks for the confirmation! 

[schirallicpa]

Can I add a question to this question?  

Same situation - 20 years old child, resides at home, provides her own support.  However, only a student for part of the year.  Then went into the Army in August.   Does she still qualify as EIC?

 

[jklcpa]

44 minutes ago, schirallicpa said:

Can I add a question to this question?  

Same situation - 20 years old child, resides at home, provides her own support.  However, only a student for part of the year.  Then went into the Army in August.   Does she still qualify as EIC?

 

 

Yes.  Support isn't taken into consideration for determining whether a person is a qualifying child for the EIC. It's the residency, relationship, age, and joint tests that are used for the EIC.

In your client's case, the child is under 24 yrs of age at the end of the tax year and is considered a full-time student for that year if he or she was a full-time student for at least 5 months of the tax year.  The child also meets the residency test because that requires the child live in the home more than 1/2 the tax year.

 

[schirallicpa]

I thought so, but boy it sure is nice to bounce a question like that out here on this forum just to be sure

.  Thank you!!!!!!

[Tax Prep by Deb]

Amen!

[Pacun]

On 1/26/2016 at 11:00 AM, schirallicpa said:

Can I add a question to this question?  

Same situation - 20 years old child, resides at home, provides her own support.  However, only a student for part of the year.  Then went into the Army in August.   Does she still qualify as EIC?

 

Yes, provided she was full time student for 5 months. "Part year" could be one day or 364 days.

[kcjenkins]

And, just to be clear,  that is "any part of 5 months"  so it could be 1/1/15 to 5/5/15  or 6/28/15 through 10/2/15, etc.  

[NECPA in NEBRASKA]

Thanks, KC. I was just looking that up, because graduation is normally in May.

[mcb39]

I just went back and re-read this entire thread.   So, is it correct that a divorced parent can claim the EIC even though it is not her year to take the child as a dependent.  She qualifies, father does not.  She is filing HOH though they have joint custody, but if she had child for more days it qualifies her for HOH.

My mind is just a'churning here.

[Lion EA]

Yep.  Divorced is when you can actually split the child benefits that usually stay with the child.  The physical custody (using IRS rules) parent retains things such as HOH and EIC and childcare credit that require custody but she/he can sign away the dependency exemption with 8832 to the noncustodial parent who could then take the exemption and child tax credit.  Each can take the medical expenses they actually paid, I think.  This summary was off the top of my head, so jump in to edit.

OP had a child who paid more than half her own support.  Are you sure?  Did you have them fill out a support worksheet?  In my area, I've yet to have a college student who paid more than half her own support, even last year of college when getting a full-time job.  Between housing and insurance and food and car/insurance/gasoline/maintenance and clothing and sports equipment and trips and...I've yet to see one of my Fairfield County clients have a kid who paid more than half her own support, even if she used student loans to pay tuition.

[mcb39]

Thanks Lion.  This just does not seem right to me, but everything I have read says that she gets the EIC.  Wow!!!  What a tangled web we weave.  Just so happens that this is not her year to claim the dependency, but because she changed jobs, her income is much lower than prior years and she had child for more days than father.