Discussion:Qualifying Child vs Exemption
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Discussion Forum Index --> Tax Questions --> Qualifying Child vs Exemption
Oregon LTC (talk|edits) said: | 25 January 2006 |
| I’ve been reading posts on several boards about the qualifying child rules for 2005. I understand the EIC & Child Tax Credit associated with a qualifying child. Nowhere have I come across where the non-qualifying child can be used as a dependent “other”.
Harry & Mary have lived together for years. Mary does not work and has no income. Mary has a child, Larry, from a previous relationship. Harry, in the past, has filed HOH, claimed Mary and Larry as dependents receiving the EIC for the child. In 2005, Larry is not a qualifying child for Harry nor is he a qualifying child for Mary (no income). Harry does supply all the support for Mary & Larry. Harry can still claim Mary as a dependent so why can’t he claim Larry as a dependent? Harry can’t receive the EIC or Child Tax Credit but he should be entitled to the exemption credit for Larry. | |
| 25 January 2006 | |
| Oregon:
Why can't Harry claim Larry for the EIC? Who is Larry a qualifying child of? No-one because Mary did not pay 1/2 the support for Larry - Harry did. Since Larry is not a qualifying child of anyone and assuming he meets all the qualifications to Larry's Qualifying Relative, why can't he take the EIC? | |
Oregon LTC (talk|edits) said: | 25 January 2006 |
| Larry does not meet the relationship test for the EIC under the new 2005 regs. (Code Sec. 152(c)(2), Code Sec 152(f)(1), as amended by Act Sec 201). My question... Does Larry qualify as a dependent for the purposes of the exemption? | |
| 25 January 2006 | |
| My understanding of the new 2005 rules:
Larry IS a qualifying child of Mary. The new tests to determine this do not ask who is providing over 1/2 the support for the child. The test is "Does the CHILD provide over half of his own support?" The answer I assume is no, so he meets all the tests of being a qualifying child to Mary. So, under the rules of a qualifying relative, Harry can not claim Larry because Larry is a qualifying child of Mary. If you have access to the 2006 U.S. Master Tax Guide, they give this exact example in Paragraph 137, page 120. | |
| 25 January 2006 | |
| I just had this very problem last night.
As I understand it, Larry is still the qualifying child of Mary (support is not an issue) and since she and Harry live together, Larry cannot be a "qualifying relative" for purposes of the dependency exemption (because Larry IS the qualifying child for another person in the same household). As I see it, its as if Harry is "gifting" his support money to Mary. There is an excellent summary page in the new TaxBook from Tax Materials, Inc., page 3-16. | |
| 25 January 2006 | |
| 1. Larry is a qualifying child of Mary. Sec. 152(c).
2. Larry cannot be a qualifying relative of Harry if item (1) is true. Sec. 152(d)(1)(D). 3. Mary is a qualifying relative of Harry [within the meaning of Sec. 152(d)(2)(H)]. 4. Larry cannot file as head of household. Sec. 2(b)(3)(B)(i). 5. Larry could become a qualifying relative of Larry in the year in which he attains the age of 19 (24 if attending school full-time). | |
Oregon LTC (talk|edits) said: | 25 January 2006 |
| Thank you, everyone, for posting on this issue. Riley, I have come to the same conclusion as you after reading the regs several times. | |
| 25 January 2006 | |
| Jlmagana spelled it out correctly. "Does the CHILD provide over half of his own support?" The support test for qualifying child vs qualifying relative are different. Riley2 also detailed it very clearly. | |
| 25 January 2006 | |
| Correction to my post above. I meant to say that 5. Larry could become a qualifying relative of Harry in the year in which he attains the age of 19 (24 if attending school full-time). | |
