NOT to take a credit

[MAMalody]

I have a weird one, for me, at least. I have an individual who does not want to take the EIC and CTC because the college his kids go to counts it as income and it puts him over the edge for financial aid/scholarships/grants. I don't remember these credits as being optional and I can't find anything as I rapidly search for it. Can someone give me some input or a direction to look. Thanks.

[David1980]

Within publication 17 you'll find a chart in the section on education credits. It discusses who can claim the education credits. The important thing to note on this chart, is that it covers the situation where the parent does not claim the dependent even though the dependent can't claim their own exemption either.

Which implies that the parent could simply not claim the child. If they do claim the child, I think they'd end up with the EIC and CTC even if you prepared it without, the IRS would probably "correct" your error.

[MAMalody]

I didn't make that connection. Thanks for the reference. I guess the question then becomes for the school, since the child is not the dependent of the parent, do I need the parents information.

[Lion EA]

FAFSA rules are different than IRS rules. You will probably need the parents' information for the college, especially since the child is not eligible to claim themselves even though the parent does not claim him/her.

[jainen]

>>the college his kids go to counts it as income and it puts him over the edge for financial aid/scholarships/grants<<

Personally, I doubt this is true. There are precious few private scholarships around these days, and they are all applied very subjectively. The vast majority of standard financial aid uses the standard FAFSA application with standard federal or similar guidelines. Any family eligible for EIC need not worry that their income is too high for this purpose.

[taxxcpa]

I had a client who technically qualified for the EIC and did not want to claim it so I checked a box indicating "NO" by the line for the EIC. He got a letter from the IRS asking him to respond if he wanted to claim it. He did not respond and the IRS did not pursue it further.