Who claims children?

[gfizer]

Okay. Here is my situation in a nutshell. I have two taxpayers. They are unmarried but live together, share all expenses, and have two minor children together. Female is self-employed and earns approximately $7000.00. Male has income from employement of approximately $50,000. This is the first year I've done their returns. Female stated that she usually claims the two children on her return and claims head of household status and that he usually files single with no dependants. If I understand the rules, the correct way to file would be to show her as single with no dependants and to file him as head of household claiming both children. Incidentally, filing this way nets them the biggest refund but that's not my goal. I just want to do it right. What do you all think?

[Pacun]

Female single with 2 dependents and male single sounds good with me and it goes according to what has been done in the past with this couple.

[RoyDaleOne]

I would say either person could claim the children, as a qualifing child. However, does not one have to pay over half of the cost of maintaining the household? Female most likely does not qualifiy as HOH. Who pays for the household?

[gfizer]

I would say either person could claim the children, as a qualifing child. However, does not one have to pay over half of the cost of maintaining the household? Female most likely does not qualifiy as HOH. Who pays for the household?

The mortgage is in the male taxpayer's name and he pays most household expenses. The male taxpayer also pays the childcare costs for the two kids.

[jainen]

>>he pays most household expenses<<

Don't jump to any conclusions from this fact. He only needs one qualifying child to claim HoH, and she potentially gets thousands in EIC.

[Jack from Ohio]

>>he pays most household expenses<<

Don't jump to any conclusions from this fact. He only needs one qualifying child to claim HoH, and she potentially gets thousands in EIC.

I call this situation the "Playing House" tax credit.

[gfizer]

>>he pays most household expenses<<

Don't jump to any conclusions from this fact. He only needs one qualifying child to claim HoH, and she potentially gets thousands in EIC.

Her earned income is so low that she gets very little EIC but on the other hand if he uses the dependency exemptions for the kids and claims HOH it makes thousands of dollars of difference in his refund. Again, my goal is not to maximize their refund at any cost. I simply want to do the returns correctly. As I understand the rules, whenever the kids can be qualifying children of more than one taxpayer then the taxpayer with the highest AGI would get to claim them.

"If a child is claimed as a qualifying child by two or more taxpayers in a given year, the child will be the qualifying child of:

the parent;

if more than one taxpayer is the child’s parent, the one with whom the child lived for the longest time during the year, or, if the time was equal, the parent with the highest AGI;

if no taxpayer is the child’s parent, the taxpayer with the highest adjusted gross income (AGI). "

Am I understanding this correctly?

[jainen]

>>If a child is claimed as a qualifying child by two or more taxpayers<<

The important word is "IF." They can trade off kids to their hearts' delight, as long as they don't BOTH claim the same one.