Discussion:Qualifying for the EIC
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Discussion Forum Index --> Advanced Tax Questions --> Qualifying for the EIC
Discussion Forum Index --> Tax Questions --> Qualifying for the EIC
| 3 October 2007 | |
| Hello, I'm not sure how to advise a client to ammend his 2006 return and claim the EIC. He filed a return using the 1040EZ, and later received a letter from the IRS informing him that he qualified to take the EIC because of his low income. After reading the tax law, he is convinced that he should be able to claim his son for the EIC as well, and I'm not so sure that I would disagree with him. He has shared custody of his son and was not able to claim him as a dependent last year as per his divorce decree. He claims him on odd numbered years only. He states that his son was with his mother from Jan. 1 - Jul. 1, 2006 (6 months and 2 days) and with him from Jul. 2 - Dec. 31, 2006 (183 days). He feels that he qualifies to take the EIC for his son because his son was (by the slimmest of margins) with him for more than half of the year. The tax law makes no reference to claiming the child as a dependent as a requirement for the EIC, only weather the child was with you MORE that half the year. Do you feel he is justified to claim the EIC for his child? It appears that the child's mother qualifies to claim him as a dependent, having him for 6 months and 2 days, And.. the child's father qualifies to claim him for the EIC, having him for 183 days. There is very little wording in the Tax Law regarding shared custody and this type of situation, your thoughts on the situation will be very much welcomed. | |
| 3 October 2007 | |
| In shared custody cases, the Tax Court counts the number of actual days. In this case, if the child arrived in the afternoon, your client may only have 182.5 days. If you feel that the client has more than 182.5 days, then I agree that the EIC may be available. | |
| 3 October 2007 | |
| Since your client has the kid for the greater part of the year, he is considered the custodial parent. As such, he can claim EIC (and head of household if he otherwise qualifies) while mom is claiming kid as non-custodial parent. She should have listed the child on line 6 as kid not living with you due to divorce.
BUT it is probably not this simple. Most likely mom claimed kid as living with her and she took EIC. You should confirm if this is the case. If she did claim EIC then if your client also claims it, you will have an IRS problem. It might not be worth going there. If you decide to claim the EIC even if mother claimed it, be prepared to show that the kid lived with your client for more than 1/2 the year. Watch out for vacations, trips, overnites etc. Finally, you said " It appears that the child's mother qualifies to claim him as a dependent, having him for 6 months and 2 days". This is not accurate. Because as you showed, she had him for less than 1/2 the year, she is not the custodial parent. She can claim the child as a dependent due to the divorce agreement. Your client should fill out form 8332 and give it to her. Good luck. | |
| 3 October 2007 | |
| Thank you for the responses, both of them help a great deal. EZTAX, thank you for pointing out my inaccurate statement about a qualifying dependent, I was under the impression the tax law stated "more than 6 months". Also, it appears that the mother made too much money and was unable to collect the EIC for 2006. As a result of this, am I correct in believing there shouldn't be any problems with the father claiming the EIC? In regards to form 8832, is the custodial parent required to supply this form to the non-custodial, or is it the resonsibility of of the non-custodial to request this form from the custodial parent; or can the non-custodial parent attach a copy of the divorce decree which states when she can claim the child? If the non-custodial parent didn't attach form 8832 to their return, or did not send an attached copy of the divorce decree, will this cause a problem for the custodial parent in claiming the EIC on the 1040X? | |
| 3 October 2007 | |
| I disagree a bit with EZTAX - a divorce decree can NOT overrule §152(e). IF, in fact, the father WAS the custodial parent, then unless he releases the exemption via a Form 8332 (or a document with ALL the information contained on the 8332), he gets the child as a dependent. The divorce decree cannot control federal law -See Miller 114 TC 184.
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| 4 October 2007 | |
| Under the proposed regulations defining the custodial parent for qualifying child purposes, the taxpayer would be required to count the number of nights of custody to determine if the taxpayer has at least 183 days of custody (184 days in a leap year). Consequently, if we were to follow the proposed regs, the child would be a qualifying child for EITC purposes if the child was present in your client’s household on the evening of December 31 since your client would then have exactly 183 nights of custody. If the child was not present in the taxpayer’s house on the evening of December 31, your client would only have 182 nights of custody, and the EITC would not be available. | |
| 4 October 2007 | |
| Agree with you on that NYEA. My bad. Taxpayer does need to atach form 8332 or equivalent. The fact that it was court ordered will not win out as you point out in Miller 114.
If ex refuses to sign a form 8332 then what? She is technically in violation of the divorce decree and I assume one could go back to the court that granted the divorce and put in a claim that the ex needs to sign the form but has anyone ever seen this done? Xnay - If taxpayer is cusodial parent then taxpayer does not need 8332 to claim EIC. Ex would need the form to claim the child. Even if the ex did not claim the EIC I would be surprised if she did not claim head of household satus, especially since the greater than 1/2 the year rule is so close. Riley2 above is doing an excellent job highlighting the precise details of what it will take to prove that the taxpayer is indeed the custodial parent. I actually had a case once where seperated parents were arguing about this. The wife pulled out a calendar showing all the days and evenings she had the child and the ex husband quickly gave up! | |
| 4 October 2007 | |
| Interesting that the Treasury believes that custody in the evening is more important than custody in the morning. | |
| 4 October 2007 | |
| Thank you all for very insightful responses.
Riley, I very much appreciate the part about counting the nights, my client states the child was with him the night of Jul. 2 thru the night of Dec. 31. So, this part should not be an issue, though I'm curious how this part can be verified to the IRS in case of being questioned, ie. personal daily calendar, written affidavit? EZTAX and NYEA, your detailed responses are very clear and to the point. In regards to the 8332, I realize that a divorce decree does not control Federal law, but so long as it meets certain conditions, pages from it can be used instead: These conditions include: 1. The noncustodial parent can claim the child as a dependent without regard to any condition (such as payment of support). 2. The other parent will not claim the child as a dependent. 3. The years for which the claim is released. The noncustodial parent must attach all of the following pages from the decree or agreement. Cover page (include the other parent’s SSN on that page).The pages that include all of the information identified in (1) through (3) above. Signature page with the other parent’s signature and date of agreement. My concern is, since the mother has already claimed the child and stated on her return that the child was with her more than half the year (not realizing how close the day count actually was), will there be an issue from the IRS? Will the mother have to send an amended return along with form 8332 or equivalent to clarify this oversight before the father will be allowed to claim the EIC? Also, the mother has since remarried and has another child, so claiming as head of household is not an issue here, just claiming the dependency and child tax credit. | |
| 5 October 2007 | |
| Did she remarry in 06? If she did then you are correct that head of household is not a problem Find out which box she checked to the right of the exemption section on the return. Did she put the child under living with me or not living with me due to divorce? If she checked the box as living with me, have her amend the return to change this. There should be no change to the tax liabiltiy. Also have her send in the 8332 with the 1040x. | |
