Dependent Question

[Tax Prep by Deb]

I have a client coming in to the office today who has three children all under 17. These children lived with her all year, but she only earned about $7,000.00. She and her boyfriend live together, however none of the children are from the boyfriend.

Obviously she could not have supported her and her children on her income, and I don't know if she received any financial assistance, I will ask her when she comes.

I have no problem claiming the children for EIC as from what I see dependency is not an issue, and if she didn't receive any financial aide then I don't see where the children provided more than 1/2 of their own support. The low income bothers me. I'm 99% sure that the boyfriend supported them however because of her income could not claim her and the children.

Am I right in not wanting to claim HH filing status, child tax credit, dependent exemption, but rather just go after the EIC?

Anyones thoughts would be greatly appreciated!

Deb!

[Bart]

She and her boyfriend live together

Did they live together all year?

I'm 99% sure that the boyfriend supported them however because of her income could not claim her and the children.

Am I right in not wanting to claim HH filing status, child tax credit, dependent exemption, but rather just go after the EIC?

I agree that you are right in not wanting to claim HH filing status, child tax credit, dependent exemption. However, I think it may be possible for the boyfriend to claim the children as dependents eventhough he cannot claim the girlfriend.

[Tax Prep by Deb]

Yes, they did live together for the whole year, however the children would be treated as her qualifying children if she files to claim the EIC. The only way that I see he could claim them is if she files just to receive her withholding back, as she will not have any taxable income. But I'm thinking that the EIC would benefit her far more than the exemption would benefit him.

Deb!

[Pacun]

Yes, they did live together for the whole year, however the children would be treated as her qualifying children if she files to claim the EIC. The only way that I see he could claim them is if she files just to receive her withholding back, as she will not have any taxable income. But I'm thinking that the EIC would benefit her far more than the exemption would benefit him.

Deb!

If she is getting child support, she will qualify for everything. Also, if the boyfriend is gifting the money to her (let's say $10,000), she could be OK. You just need to ask more questions.

[Lucho]

Based on this post, I assume that if a couple leaving together as boy/girl friend and only one of them had income during the year, the one of them having income can file as head of house hold claiming the other as dependent. I thought HOH implies having a qualifying child or a qualifying relative only, but not in the case of couples just because they leave together without being married.

Now my question is this:

Can a boy friend file as HOH (where there are no children) claiming her girlfriend as dependent? (Assuming the boy friend provided the support for the year.

Lucho

[Lucho]

Based on this post, I assume that if a couple leaving together as boy/girl friend and only one of them had income during the year, the one of them having income can file as head of house hold claiming the other as dependent. I thought HOH implies having a qualifying child or a qualifying relative only, but not in the case of couples just because they leave together without being married.

Now my question is this:

Can a boy friend file as HOH (where there are no children) claiming her girlfriend as dependent? (Assuming the boy friend provided the support for the year.

Lucho

I am digging on my own question and almost getting the answer, but if you have any comment on please post it.

Thank you

Lucho

[Tax Prep by Deb]

Relationship test has to be met, so in this case I don't believe he could file as head of household, but could claim girlfriend as a dependent.

Deb!

[Pacun]

Lucho,

TP must be blood related to the dependent in order to qualify as HH.

[kcjenkins]

http://apps.irs.gov/app/eitc2009/SetLanguage.do?lang=en

http://www.irs.gov/publications/p929/ar02.html

[Tax Prep by Deb]

Update!

Met with client today and she did receive aid, both cash and food stamps. When I compare the amount divided by household and compare her income divided by household she cleary contributed less. The way I read it, the money and food stamps gets counted towards child supporting self? However in one spot it reads that it is treated as state provided support, therefore possibly child not supporting self 1/2?

Am I making more of this than I should be?

Deb!

[Pacun]

Deb, support is no longer considered for the qualifying child test, as long as TP herself is not the qualifying child of someone else.

Lucho,

Adopted children, step children and their descendents qualify TP for HH. I said before that blood relationship should exist but adopted and step children and their descendents qualify TP for HH

[Lucho]

Deb, support is no longer considered for the qualifying child test, as long as TP herself is not the qualifying child of someone else.

Lucho,

Adopted children, step children and their descendents qualify TP for HH. I said before that blood relationship should exist but adopted and step children and their descendents qualify TP for HH

Thank you Pacun.

Lucho

[Tax Prep by Deb]

Deb, support is no longer considered for the qualifying child test, as long as TP herself is not the qualifying child of someone else.

Pacun,

But under the info in all the publications I have read it does state that the child must not have provided more than 1/2 of his own support. My question is does the aide she receives count towards the child's own support?

Deb!

[Pacun]

File woman, single with 3 dependents and man single with no dependents. If this is not the right answer, other atxer will jump in.

[Pacun]

Are these children actors? If yes, maybe they provided more than half towards their support. Do the children have a lot of money, which makes money for them? If yes, maybe they provided more than half towards their support. Mother qualifies for EIC and maybe for everything else.

This also will help you (I am sure you have visited but it doesn't hurt to include it.

http://www.eitc.irs.gov/central/childbenefit/

Also, check the amount of refund the lady got last year from IRS and state and add it to her $7,000.00 when calculating support. So in reality, maybe, this lady had more than $7,000 to support her family.

[Tax Prep by Deb]

Are these children actors? If yes, maybe they provided more than half towards their support. Do the children have a lot of money, which makes money for them? If yes, maybe they provided more than half towards their support. Mother qualifies for EIC and maybe for everything else.

This also will help you (I am sure you have visited but it doesn't hurt to include it.

http://www.eitc.irs.gov/central/childbenefit/

Also, check the amount of refund the lady got last year from IRS and state and add it to her $7,000.00 when calculating support. So in reality, maybe, this lady had more than $7,000 to support her family.

I've been there and did their tool and she does qualify for EIC. This is her only source of income, she didn't work in 2008 so no tax return was filed, nor did she collect unemployment for any of 2009. For the most part her boyfriend supported her and the kids with the exception of the 7,000.00 and what she received in aide.

I'm not questioning the EIC as support is not one of the tests, but it does come into play with the dependent and head of household status. Does the aide she received from the State get credited as money that the children used for their own support?

Deb!

[taxguy057]

Here's my take on it all... She meets all requirements as far as the EIC is concerned we got that part. Now as for the qualifying for HOH, the child does not have to be a dependent to qualify, but her income really doesnt factor in except in perception which is not in any of the rules. Yeah we know its impossible to support 3 children on just 7,000, but thats just the stated amount on paper she gets. Sure she's getting money from boyfriend, but he has no relationship to them except support so that knocks him out for claiming. The state may be giving assistance, but the state cant possibly claim the kids right? lol! Basically, the support she gets from the state is in her name. She has to qualify for it so it is through her that the support passes to the children. She is the provider of that support for them, thus she can file HOH. There's no max or min amt of income she must have to claim it. The law just says support by what ever means it comes from (legal) she is covered. Now that's just my rationale of the situation. Please chime in and let me know what you think everyone....

TG

[Pacun]

"Does the aide she received from the State get credited as money that the children used for their own support?"

I don't think so. That's why I said:

Are these children actors? If yes, maybe they provided more than half towards their support. Do the children have a lot of money, which makes money for them? If yes, maybe they provided more than half towards their support. To me, when the IRS says, the child didn't provide more that 1/2 of his/her own support, they are referring to 16-19 year old children who have jobs.

Clearly she doesn't qualify for head of household.

I am surprise not many ATXers are replying to this post. Maybe you should start a new post.

[taxguy057]

Now I am assuming that some her state assistance does include the home she's staying in... like sec 8 or HUD home program and Habitat for Humanity type programs? I have several clients in these situations and they come out fine every year. I even missed a form 8812 on a client one year and IRS contacted them and told them that had me amend the return so they could get it! :)

[Pacun]

Remember that the EIC was invented for people who make little money (like your client) and have children. Just take notes and keep records of the interview.

[kcjenkins]

The aid she gets from the state is not counted as the children's own support. That is only for money they earned. It is considered as support from the state, and at one time it was counted against the parent when figuring the parent's share of support. But then the IRS started not counting it against the parent, so you can ignore it, basically.

[Tax Prep by Deb]

Thank you Pacun and KC as well as all the others that have responded. I read a part where it says that monies provided by the state would be considered support by the state. So I felt based on that, she should be able to claim them for all the credits, except of course head of household, but her low income was a concern to me. The overall difference to her tax return would be just a little over 600.00 but I would hate for her to get a letter dissallowing it and ending up having to pay it back.

Again, thanks for all who responded.

Deb!

[Kea]

Maybe I missed something in the discussion, but I don't think she gets head of household. One of the requirements is that she provide > 50% of maintaining the household. From this scenario, I would assume the boyfriend is paying more towards rent, utilities & groceries than she is.

I see no problem with claiming them as dependents & EIC.

[Tax Prep by Deb]

Head of Household was never an issue. She clearly would not qualify for this because her boyfriend clearly provides over 50 percent of expense.

The only question had to do with claiming the children as dependents.

Deb!

[Kea]

I thought I might be missing something. I must have misread something or skipped a post. Sorry about that.