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live together with children


Possi

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New clients live together and have one child. 

One can itemize, one can take the standard deduction. 

Either one can claim the child...... BUT..... only the highest income can claim the HOH filing status, CORRECT? 

So, if higher income itemizes, lower income can file as "single" with child, correct? Lower income cannot file as HOH and get the bumped up standard deduction, right? 

I'm burnt out. 

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If EIC credit is involved and if he has enough itemized deductions, maybe the mother can file as single and claim the child. 

I see these choices:

Mother: Single which makes the father HH with a dependent
Mother: Single with one dependent which makes the father as single with no dependent. 

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On 4/12/2021 at 4:34 PM, Pacun said:

If EIC credit is involved and if he has enough itemized deductions, maybe the mother can file as single and claim the child. 

I see these choices:

Mother: Single which makes the father HH with a dependent
Mother: Single with one dependent which makes the father as single with no dependent. 

There's no EIC involved. I think my head was working with a "tie breaker" rule when I was thinking about incomes. He made about $12000 more than she did, $61k vs $49k.

Last year, they did DIY and she claimed the baby and HOH filing status. 

He also claimed HOH claiming his child from another mother whom he had the right to claim. They split custody 50/50. So, on his years to claim her, he gets it all. 

Two HOHs under the same roof. 

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He can claim HOH with his kid only if the kid lives with him more than half the year. He can claim the kid as a dependent on years his ex releases the dependency to him. His ex, if kid lives with her more nights, is always HOH, but sounds like she signs away the dependency every other year. By the way, it's only 50/50 during leap years, unless they wake up the kid halfway through the night to go to the other house!

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8 hours ago, Lion EA said:

He can claim HOH with his kid only if the kid lives with him more than half the year. He can claim the kid as a dependent on years his ex releases the dependency to him. His ex, if kid lives with her more nights, is always HOH, but sounds like she signs away the dependency every other year. By the way, it's only 50/50 during leap years, unless they wake up the kid halfway through the night to go to the other house!

Well, nobody's looking in the windows, and that was the original divorce agreement, and he claims they share her.

I know the rules, you know the rules.

It's the 2 HOHs under the same roof that make me go hmmmmm. But, they aren't married, have pretty close incomes, and as  roommates, they might share expenses under the same roof for their own children and both claim HOH. I would guess that's how they got away with it last year. 

It's the ageless, timeless discussion with no real answer. Like I said, nobody's looking in the window. 

I do know my son and his wife split my granddaughter like that. They live within a mile of each other and DO share custody.  I don't make them count nights. One gets her one year and one gets her the next. It's in their divorce, they purposefully live close so that it's easy to have her stay at either place, and she does.

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11 hours ago, Lion EA said:

By the way, it's only 50/50 during leap years, unless they wake up the kid halfway through the night to go to the other house!

I realize that 365 divided by 2 is not going to come out evenly.  However, if the kid spends a week with grandma or at summer camp, there are 358 nights left which could be divided evenly.  And the first year the parents are separated they could both have the kid more than half of the year. 

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The week with grandma or at summer camp is a temporary absence that does not reduce the nights spent, still counts as nights at the parent's house that would've had the kid. And, the first year, one parent still had the kid for more nights.

State divorce law does not trump federal tax law. Dependency goes to the one with the most nights. Dependency can qualify the parent for HOH. That parent can sign away dependency, but cannot sign away HOH.

Will they get caught? Probably not. But we can't play audit roulette, per Cir 230. And, no client is important enough to risk my EA license.

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Under proposed rules, the tie-breaker rules will make a difference in who can claim head of household:

https://www.federalregister.gov/d/2017-01056/p-110

Quote

(5) Shared residence—(i) In general. If two or more taxpayers not filing a joint return reside in the same living quarters, each taxpayer may be treated as maintaining a separate household if each provides more than one-half of the cost of maintaining the separate household. For this purpose, two households in the same living quarters are not considered separate households if any individual in one household is the spouse of any individual in the other household, or if any individual in one household may claim, or would have priority under the tiebreaker rules in section 152(c)(4) to claim, any individual in the other household as a dependent.

....

Example 2.

A and B, an unmarried couple, have two children together (C1 and C2) and all four individuals live in the same living quarters for the entire tax year. Both A and B contribute to paying the expenses of the couple and the two children. A has higher adjusted gross income than B. Each parent files a tax return. Under the tiebreaker rules in section 152(c)(4), the parent with the higher adjusted gross income (in this case, A) would have priority to claim each child as a qualifying child if both claimed the child. As a result, B may not be treated as maintaining a separate household with either child or both children. Therefore, if B may be claimed as A's dependent, then all four individuals are members of the same household. However, if B may not be claimed as A's dependent, B may be treated as maintaining a separate household consisting solely of B, even if B claims one of the children as a dependent on B's return.

 

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4 minutes ago, TexTaxToo said:

Under proposed rules, the tie-breaker rules will make a difference in who can claim head of household:

https://www.federalregister.gov/d/2017-01056/p-110

 

Sooooo in my case, where an unmarried couple have ONE child TOGETHER, only one can claim HOH. That is the case this year. 

Backing up the truck, if HIS daughter from another mother lived with them for over half the year, HE can claim HOH, AND under the tiebreaker rule, Mother of their baby cannot claim HOH because he COULD claim their baby for HOH, even though he doesn't. 

She is single. No HOH.

 

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22 minutes ago, Possi said:

Sooooo in my case, where an unmarried couple have ONE child TOGETHER, only one can claim HOH.

There is no question about that.  There must be a different qualifying child for each HOH.

 

24 minutes ago, Possi said:

She is single. No HOH.

That is the case under the proposed rules.  As far as I know, they have not yet been finalized.  That means you can rely on them if they support what you want to do, but do not have to rely on them if there is support for what you want to do under the current regulations.

So you have plenty of support for the father claiming HOH.

For the mother last year, not so much.

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3 hours ago, Lion EA said:

The week with grandma or at summer camp is a temporary absence that does not reduce the nights spent, still counts as nights at the parent's house that would've had the kid. And, the first year, one parent still had the kid for more nights.

State divorce law does not trump federal tax law. Dependency goes to the one with the most nights. Dependency can qualify the parent for HOH. That parent can sign away dependency, but cannot sign away HOH.

Will they get caught? Probably not. But we can't play audit roulette, per Cir 230. And, no client is important enough to risk my EA license.

I agree that it is a temporary absence.  How can you determine which house the kid would have been at in cases where the kid goes back and forth equally? 

And the first year if they live together for 65 days in a house that they provide together, before separating and each parent then gets the kid for 150 nights after they separate, who provided the house for more than half the year?  They both did but they can't both claim head of household and the dependency exemption for the same kid. 

This is why I liked tie breaker rules.  Sometimes there is a tie. 

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When there's a tie, explain the tie-breaker rules which the IRS will use if both parents claim the same benefits.

Where would the child've been if not at camp? Who would the camp/grandma have called to pick up the child if sick/hurt/homesick? Was it a maternal or paternal grandparent? Facts and circumstances.

Dependency can go back and forth easily with an 8832. But HOH with one child doesn't move as easily. I think Possi's parents live close together, so maybe child literally moves for half the year. Not as easy when one parent's in a different school district or works full time. Or kids' friends' parents don't want their daughters at a sleep-over at a single dad's home or son's friends love to visit at single dad's home...

I tell my clients to keep that calendar, because if the IRS does apply a tiebreaker, they'll need that contemporaneous calendar and every scrap of documentation they can get.

These situations are going to be challenging for the new Advanced Refundable Child Tax Credit and explaining why a client doesn't qualify this year or why they're paying it back at tax time!

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4 hours ago, Lion EA said:

Decades ago when I worked at a Block Premium office, our training told us that if the adults share the master bedroom, it's one household !! Now one could still pay the bills for her kids and the other for his kids...

I think this is a pretty good rule of thumb!

https://www.unclefed.com/ForTaxProfs/irs-wd/1998/1998-041.pdf

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Good memo you linked to.

Only us old folks remember, but I use the old TV show Kate & Allie as an example that could've been two households under one roof if they kept good records. And, the master bedroom example for one household. After those broad generalities, it's facts and circumstances.

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