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Discussion:Qualified child- revisited. Where does it allow a choice for unmarried parents?

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Discussion Forum Index --> Basic Tax Questions --> Qualified child- revisited. Where does it allow a choice for unmarried parents?


Discussion Forum Index --> Tax Questions --> Qualified child- revisited. Where does it allow a choice for unmarried parents?

Jakescia (talk|edits) said:

30 March 2012
The question is:

Where in the "official IRS literature" does it allow parents to make a choice as to who claims the qualified child, in the absence of a joint return, and not divorced/separated?

The situation: Mother and father:

have lived together throughout the entire tax year,
as one economic unit,
have never been married,
had a baby during the year.

Father has adjusted gross of 40K……..mother 15K.
The group would fare better if mother takes QC, and claims EITC.
There will be no conflict between the parents.....we control both returns.

Archives here indicate a general opinion of the parents being able to CHOOSE which of them is able to declare the QC on their returns…….but I could not locate specific references to Code or regs within the discussions.

My reading of section 152 …(152(c)(4))….indicates that the "tie-breaking rules" are not really "tie-breaking" in the sense that when IRS notes a problem, THEN the rules are used to sort out the results. Rather, the rules are literal, and apply all the time, even when there is no conflict beforehand.

Example: 152(c)(4)(A) "…if …an individual may be claimed as a qualifying child by 2 or more taxpayers…..such individual SHALL be treated as qualifying child of the taxpayer who is-------" 152(c)(4)(A)(i) a parent of the individual, or 152(c)(4)(A)(ii) if clause (i) does not apply, the taxpayer with the highest adjusted gross income for such taxable year.

152(c)(4)(B) "If the parents claiming any qualifying child do not file a joint return together, such child SHALL be treated as the qualifying child of------ 152(c)(4)(B)(i) the parent with whom the child resided for the longest period of time during the taxable year, or 152(c)(4)(B)(ii) "if the child resides with both parents for the same amount of time during such taxable year, the parent with the highest adjusted gross income."

I see nowhere in 152 any wording that would allow one to infer "in the event the parents cannot agree, then and only then will these rules apply………"

Notice 2006-86………. The preamble to Notice 2006-86 emphasizes that it is applicable to the situations where "….. the child is used by multiple taxpayers to claim…." Resultantly, its discussions ASSUME that IRS is already in the position of having to determine which return has to have the QC eliminated…….ie, the taxpayers have already "double-claimed".

Our problem……again……..is where does the Code allow an election by the unmarried, co-habitating "friendly" parents to allocate the QC?

Notice 2006-86……….preamble: The IRS has issued interim guidance under the Code Sec. 152(c)(4) "tie-breaking rule." This rule is used to determine which taxpayer may claim a qualifying child when the child is used by multiple taxpayers to claim (1) head of household filing status, (2) the child and dependent care credit, (3) the child tax credit, (4) the earned income credit, (5) the exclusion from income for dependent care assistance, or (6) the dependency deduction. The tie-breaking rule of Code Sec. 152(c)(4) shall apply to these provisions as a group, rather than section-by-section, when more than one taxpayer claims a qualifying child. The child is, therefore, treated as the child of only one taxpayer for all the provisions that employ the Code Sec. 152(c) uniform definition of a qualifying child.

Note........."is used"……..ie past tense

Notice 2006-86 does allude to parents being able to make a choice. At its example 5, it states that: "…iii) The older child is treated as the qualifying child of the father and the younger child is treated as the qualifying child of the mother. The tie-breaking rule of §152(c)(4)(B) does not apply because no two taxpayers are claiming the same child as a qualifying child for any of the benefits."

If a choice were not allowed, then each of the children would be a "qualified child" to each parent, and the merry-go-round would start again.


I even got CCH into the act………just to get their "opinion"………

In their "Tax Research Consultant, PLANIND: 3,052.10, Dependency Exemption: Tiebreaker Rules"……… The pertinent data is………"For tax years beginning after 2008, the tie-breaker rules are clarified in two respects. First the rules apply whenever two or more taxpayers can claim the same child as a dependent, regardless of whether they do so. Second, if the child's parents can claim the child as a dependent, but do not do so, another taxpayer can claim the child as a dependent only if that taxpayer's AGI exceeds that of each of the parents."

Note CCH draws a distinction between when taxpayers "can" claim, as compared to application when they "do" claim.

The IRS………. The only reference I could locate within IRS "data" that provided an "opinion" on which I felt I could rely, is in Publication 596 Earned Income Credit.

In the example 11 (page 18) it presents a parallel example to the problem that gave rise to this "endeavour"…….unmarried parents living together throughout year, with one QC. Mother has 12K AGI, father's is 14K.

The publication makes the statement "Your son's father agrees to let you treat the child as a qualifying child. This means, if your son's father does not claim your son as a qualifying child for the EIC or any of the other tax benefits listed earlier, you can claim him as a qualifying child for the EIC and any of the other tax benefits listed earlier for which you qualify."

In this instance, I can live with the "choice capacity", merely because the amount at risk is not much, and I intend on getting the two taxpayers to provide me with a signed memo of agreement for our files, so if things go haywire between them within the foreseeable future, we have a reasonable basis for our actions.

However……..it goes against my grain to not have something a little more concrete in our files than a blurb from a publication.

If you can point me in the right direction………..many thanks.

Podolin (talk|edits) said:

30 March 2012
Wow, Jakescia, you have done some impressive research and summarized it very well here. Until you pointed out the CCH, I had the same conclusion as yours - namely, it is more of a mandate than an after-the-fact tie-breaker. As you appear to have been so thorough in your research, all I can add is, at best, a very long shot - contact CCH and see if you can get to their technician who wrote the "opinion," with the hope of ascertaining that person's reasoning. They must have a review and approval process, I would expect. I assume you have hunted unsuccessfully for scholarly articles on the issue.
  • post from "itin" removed in accordance with the info in the pink notice box at top of forum (the post just copy/pasted a part of the Pub info on this general topic, and it didn't really apply in any case)

Podolin (talk|edits) said:

30 March 2012
This is from an IRS "article". "If they cannot agree who will claim the child as a qualifying child, and more than one person actually claims tax benefits using the same child, the tie-breaker rules (explained below) applies." I read that sentence to imply that, if they CAN agree (and all factors are met), they can choose which parent claims the QC. Not exactly Code and Regs, but at least it is from IRS.

Jakescia (talk|edits) said:

30 March 2012
ITIN------- that is not the issue. Issue is not what the IRS will do if two taxpayers claim the same QC.....that is an obvious application of 152(c)(4)......

rather........ what allows the taxpayers-parents to "agree" as to an allocation of the QC....that is contrary to the result of applying the "tie-breaker rules"?

I read 152(c)(4) as being a mandatory application, regardless of what the taxpayers would want.

However, since there is so much leeway in the "literature" as set forth by learned folk------- there must be something that I am missing. I just cannot find it, and would like to know.


In this instance, I am quite content with signing the return in question, if for no other reason than the IRS publ 596 "allows it"---------- but for so-called tax pros to rely on that going forward........naaaa.

Podolin (talk|edits) said:

31 March 2012
Ideally, something a lot more authoritative than Pub 596 and the IRS article would give you the definitive answer. Absent that ideal, you are making the practical and (I believe) correct decision. Move on. And don't hold your breath for more clarification. I'd bet the same issue will exist next year at this time.

Jakescia (talk|edits) said:

3 April 2012
Update......... response from CCH indicates that CCH does not understand the position taken by IRS in its publications 596, 17, and 501........which indicate an prior agreement between taxpayers not filing joint returns will be recognized.

CCH's research specialist agrees that based on the language of the Code, and the lack of anything to the contrary in "authoritative" IRS literature (regs, etc.)........ the parents are required to follow the language of 152(c)(4) in all situations---potential and active.

CCH pointed out that the Fostering....Act of 2008 included language to change 152 to its current "potential", or "futuristic", application from language which was strictly "active", or "act completed", in its application...........and hence the question as to why IRS continues to follow/allow application much less stringent.

Ddoshan (talk|edits) said:

3 April 2012
Code seem pretty clear. Sec 152 describes the rules for a qualifying child. If you meet these tests you have a qualifying child. 152c4 seems to specifically deal only with a situation where 2 or more taxpayers are claimingItalic text a qualifying child and the tiebreaker that will determine the winner.

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