Discussion:EIC and MFS

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Discussion Forum Index --> Basic Tax Questions --> EIC and MFS


Discussion Forum Index --> Tax Questions --> EIC and MFS

Taxoncall (talk|edits) said:

22 January 2009
Client has a 23 years old daughter who is married and lived with mother all of 2008. Daughter makes only 3500 and is a full time student all year. Mother want to claim her as a dependent and claim the dependency exemption. Daughter husband has income of $28000. Daughter does not want to file a joint return with her husband and if she files a separate return sje will only file to claim a refund. Mother income is $30,000

1. Can the mother claim the dependency exemption for the daughter. I say yes.

2. Can the mother claim the EITC using the daughter. I say yes.

What are your opionion?

Tonymontana (talk|edits) said:

22 January 2009
I say no.

Taxoncall (talk|edits) said:

22 January 2009
Please explain.

Taxoncall (talk|edits) said:

22 January 2009
This is my reasoning for the dependency exemption. The married couple chose not to file a joint tax return and there would not have being any tax liability if she filed MFS.

As for the EITC. The mother can cliam her as a dependent as meets all the other qualification for the EITC.

Ddoshan (talk|edits) said:

22 January 2009
It appears all would be OK. Mother must be able to take the exemption for her daughter in order to qualify for the EITC.

Tonymontana (talk|edits) said:

22 January 2009
Trust but verify.

Sounds fishy.

Husband makes $28K.

Mother makes $30.

Why is daughter married if she lives and is supported by mother. Does husband not provide any support?

But then again there are those situations. I would do my due diligence.

MIG999 (talk|edits) said:

22 January 2009
Odd set of facts. If the facts are as presented, then I would say yes to both questions. Be ready to prove that mother does provide support for child and that husband is not, in fact, providing money to mother to support daughter.

As I told a young trainee today, "If you think taxes are about numbers, you are wrong. Taxes are about people."

I might have added, "and about the odd situations in which they find themselves".

Mark g.

Tonymontana (talk|edits) said:

22 January 2009
One more thing.

Does mother have another daughter?

I would love to meet her.

Sorry, couldn't resist.

But seriously Taxoncall. Do your due diligence.

Taxoncall (talk|edits) said:

22 January 2009
Thanks. I will look at the facts again to see if the child provided less than half of her own support. I will give the mother the support worksheet to complete.

Taxea (talk|edits) said:

22 January 2009
Check my post on the latest HH and EITC rules. taxea

Ddoshan (talk|edits) said:

22 January 2009
If the child only made 3500 it is unlikely she provided over 50% of her own support. Unless she got school loans, and grants and or had some other sources of income. Scholarships would not count as support provided by the daughter.

Taxea (talk|edits) said:

23 January 2009
Ah but, she made 3500. Like I said check my post on the latest EITC rules. I think the IRS is telling us that they are no long going to blanketly accept dependents just because they live at home. I do agree that one could no support themselves on such a small amount of money but the IRS must be getting complains from parents who can't get their kids out of the house. (tehee)taxea

David1980 (talk|edits) said:

23 January 2009
Let's work through this one.

First, this pesky marriage thing... "You generally cannot claim a married person as a dependent if he or she files a joint return."

Daughter is not filing a joint return, so that's OK.

First, is the daughter a qualifying child for the mother? 1) Relationship test = daughter = valid, 2) Age test = under 24 and a full time student = valid, 3) Residence test = uh-oh, not enough INFO! 4) Support test = with only $3500 of income that looks safe, 5) If child is qualifying child of more than one person ... Parent always wins tie-breaker so unless father is somewhere in the picture.

So right now the big question is where does the daughter live. Does/did the daughter live with the husband? Or did the daughter live at home? If yes answer seems clear.

Let's assume no.

Now we've ruled out qualifying child, let's check qualifying relative. QR rule #3 Gross Income must be less than $3500. Since income is $3500 it can't be a qualifying relative.

So we go back to qualifying child. Where did the daughter live?

Ddoshan (talk|edits) said:

23 January 2009
Poster indicated daughter lived with mother all of 2008.

Joanmcq (talk|edits) said:

23 January 2009
Ok, I'm being creative here but....lets say husband is in military, in Iraq all year. Daughter is going to school, & so hubby can save money, lives with mom while hubby is in Iraq. Perfectly plausible & Mom could claim EIC.

Ddoshan (talk|edits) said:

23 January 2009
If they were married and technically living together then I would say no. If separated prior to husband going to Iraq if before the last half of the year and the intent is for husband not to return home then probably.

CATAXES (talk|edits) said:

23 January 2009
Why? EIC on $30K under $650. Costs husband more than $700 for MFS on his income.

Kerryfreeman@sbcglobal.net (talk|edits) said:

23 January 2009
I also think that the married couple would also lose out on $600 for the recovery rebate, Even if mom claimed daughter on 2007, husband can claim wife on 2008

David1980 (talk|edits) said:

23 January 2009
"Poster indicated daughter lived with mother all of 2008."

Yeah, I'm blind. Looks fine to me. Qualifying child & EIC.

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