earned income credit

[schirallicpa]

Couple live together.

Woman has child from previous relationship and child with current beau. She claims the first, he claims the second. His income is $50K. He claims HOH. Her income is $18K, she claims single.

Can she take the EIC?

I'm remembering that when you live together, and the other party has more income, then the childs EIC-ness (is that a word?) goes to the other person (if qualifying otherwise), and the other person then doesn't get EIC because income is too high. But in this case, the child is not his anyway.

Clear as mud.

Any help would be appreciated.

[MargaretMort]

According to THE TAX BOOK, the child is her qualifying child and she can claim EIC. Have to do the worksheet. I haven't done one in years so I can't go further than that. MM

[kcjenkins]

Yes, since that child is not his, she can. Just one more way our government encourages 'shacking up' over marriage.

[Catherine]

Yes, since that child is not his, she can. Just one more way our government encourages 'shacking up' over marriage.

Anything you subsidize, you get more of.

[schirallicpa]

ok- that's what I thought, but geezsh - I just can't believe the credits given to some, and the ones that work hard and have a decent income, don't get anything. I have a lot of clients this year who earn to much for the "work to pay" credit; who have paid for their children to go to school, but have too much income to get a credit; who can't qualify for a deduction for student loan interest. And I have clients getting hit with AMT. Then there's these people - I'm sure she collects other benefits from the county and state, not to mention free lunches at school, and eventually free ticket to college.

I know - I know.....grumble mumble.....

THANK YOU everyone for your help.

[jainen]

>>ones that work hard and have a decent income<<

This kind of sounds to me like you are blaming low income people for being lazy. That is an attitude that has never stood up to evidence, though a lot of very motivated people have tried. In fact, poor people have to work harder than wealthy people. How about you--are you wealthy or lazy?

[Terry D EA]

Jainen I see where you are coming from and I agree, there are alot of low income people working their tails off for little money and, in my opinion, deserve every break they are entitled to. But, I also see those who are working the system as well. However, I guess it is not part of our job to judge how and what the client is doing. Our only responsibility is due diligence for EIC purposes. I agree with KC as well that this is just another way our Government promotes poverty or other immoral practices.

[Margaret CPA in OH]

In my opinion it is more a situation of unintended consequences of what likely was a well intended tax law. I honestly don't believe it was designed to promote this behavior. I haven't read the history of this law but just by the name I suspect it was designed to reward those who work and earn what they can but are not fortunate enough to be hedge fund managers with billion dollar bonuses. They should have studied harder to learn those valuable skills that so greatly benefit our society.

Oh my, on my soapbox again.