EIC question

[schirallicpa]

I'm just asking for quick clarification on EIC and dependency rules. If 2 people living together have mutual children, then I can split the children between the returns. As I understand, the person with the greater income would claim HOH. Also - my question - the person with the greater income takes all the kids as EIC kids, regardless of who takes them as dependent. Is that correct?

Thank you for your help.

[TAXBILLY]

Qualifying Child of More Than One Person

If the child meets the conditions to be a qualifying child of more than one person, only one person can claim the child as a qualifying child for all of the following tax benefits, unless the special rule for children of divorced or separated parents applies (see publication 501 for additional information on children of divorced or separated parents).

Dependency exemption

Child tax credits

Head of household filing status

Credit for child and dependent care expenses

Exclusion for dependent care benefits

Earned income credit

No other person can take any of the six tax benefits listed above unless he or she has a different qualifying child. If you and any other person can claim the child as a qualifying child, the following rules apply.

If only one of the persons is the child's parent, treat the child as the qualifying child of the parent.

If the parents do not file a joint return together but both parents claim the child as a qualifying child, the IRS treats the child as the qualifying child of the parent with whom the child lived longer in 2009. If the child lived with each parent the same amount of time, the IRS treats the child as the qualifying child of the parent who had higher adjusted gross income (AGI) for 2009.

If no parent can claim the child as a qualifying child, treat the child as the qualifying child of the person who had the highest AGI for 2009.

If a child qualifies a parent for any of the listed credits but the parent does not claim the child, treat the child as the qualifying child of the person who had the highest AGI for 2009, but only if that person's AGI is higher than the highest AGI of any parent of the child.

taxbilly

[Lion EA]

Although the tax benefits go with a given child as a "package" except in divorce, you do have to work through the qualifications for each benefit separately. For instance, the person who paid over half the cost to keep a home for a qualifying child may file as HoH. That might or might not be the highest income person in the household. It's the person who actually paid over half and has a qualifying child.