JohnH Posted August 14, 2007 Report Share Posted August 14, 2007 This makes some sense to me, but I'd like to get some reassurance since I don't have a lot of experience with EIC. Taxpayer receives $15K disablity income and he & his wife have $22K in W-2 earnings. They have two children - one is a student age 19 and the other child is age 15. Both children lived in the home all year. The taxpayers claim the 19-year-old student as a dependent, but did not claim the 15-year-old as a dependent because this chld receives $9K in Social Security benefits as a minor child of a disabled parent. When I check the box to "Not Claim" the 15-year-old as a dependent, ATX still calcuates the EIC based on two qualifying children. I've done a cursory check and this seems correct, but I'd like to hear from someone with more EIC experience to confirm for me that this is how the EIC works in this situation. Quote Link to comment Share on other sites More sharing options...
Pacun Posted August 14, 2007 Report Share Posted August 14, 2007 It is correct. You have to pay attention to the questions of qualifying child on SCH EIC. Please make sure to read question 3 and maybe 5 on the qualifying child of SCH EIC. The key here is that they lived in the same household for more than half of the year and that they are under 19 or under 24 if full time student or any age if disabled. If they lived only 5 months with the parents (except for temporary absences), they would not qualify for EIC even if the parents provided 100% of support. Quote Link to comment Share on other sites More sharing options...
JohnH Posted August 14, 2007 Author Report Share Posted August 14, 2007 Thanks Pacun. Since I don't efile, most EIC clients don't bother coming to me. (or don't bother me by coming - whatever) EIC makes sense to me sometimes and then at other times I lose my train of thought. In this case it's a $1,400 difference and I just wanted confirmation. Quote Link to comment Share on other sites More sharing options...
Pacun Posted August 14, 2007 Report Share Posted August 14, 2007 John, Please wait for peer review... just in case we missed something. Quote Link to comment Share on other sites More sharing options...
Eli Posted August 14, 2007 Report Share Posted August 14, 2007 John, Please wait for peer review... just in case we missed something. You have it right, Pacun!! Eli Quote Link to comment Share on other sites More sharing options...
txyank Posted August 16, 2007 Report Share Posted August 16, 2007 This makes some sense to me, but I'd like to get some reassurance since I don't have a lot of experience with EIC. Taxpayer receives $15K disablity income and he & his wife have $22K in W-2 earnings. They have two children - one is a student age 19 and the other child is age 15. Both children lived in the home all year. The taxpayers claim the 19-year-old student as a dependent, but did not claim the 15-year-old as a dependent because this chld receives $9K in Social Security benefits as a minor child of a disabled parent. When I check the box to "Not Claim" the 15-year-old as a dependent, ATX still calcuates the EIC based on two qualifying children. I've done a cursory check and this seems correct, but I'd like to hear from someone with more EIC experience to confirm for me that this is how the EIC works in this situation. I have a high volume of clients that file EIC forms and would like to add that ATX is extremely reliable in handling the calculations , if the questions are answered carefully. Through the swirl of complicated changes made over the years,ATX has performed remarkably well in keeping the results accurate. sunday Quote Link to comment Share on other sites More sharing options...
cientax Posted August 16, 2007 Report Share Posted August 16, 2007 I don't understand why they don' claim the 15 year old as dependent if the child is living with them the entire year and they provided his support. The childs ss income is not taxable and even though it's used for his support, it appears that parents still provided more than half his total support. His gross income makes no difference. Why would this child not be their qualifying child? Quote Link to comment Share on other sites More sharing options...
jainen Posted August 16, 2007 Report Share Posted August 16, 2007 >>it appears that parents still provided more than half his total support<< To the most general appearance, the parents have $36,000 which is $6,000 per household member. It would take some documentation to convince me that the child with $9000 does not provide more than 1/2 self support. Quote Link to comment Share on other sites More sharing options...
Pacun Posted August 16, 2007 Report Share Posted August 16, 2007 It really depends on what expenses the 15 year old has and where his own money went or is. I have seen cases that one person uses 50% of the income and the other 50% is divided into 3 other people. As long as he did not provide more than 50 percent for his own support, parents should be able to claim him. You also have to consider that parents (may be) had savings at the beginning of the year. Quote Link to comment Share on other sites More sharing options...
joanmcq Posted August 16, 2007 Report Share Posted August 16, 2007 Also, is part of the 15 year old's income going to support another household member? I have a tenant with mom and one son (14) on disability. Stepdad works and another daughter is also in household. I'm pretty sure some of son's money helps to support daughter too; especially the rent. Quote Link to comment Share on other sites More sharing options...
mcb39 Posted August 17, 2007 Report Share Posted August 17, 2007 Or, they could be saving some or all of it for his future education. I, also, wondered why they weren't claiming him as a dependent in the first place, but you all have offered some good arguements pro and con. The true test lies in the facts which only the family and the preparer may know. Quote Link to comment Share on other sites More sharing options...
JohnH Posted August 17, 2007 Author Report Share Posted August 17, 2007 I appreciate the validation of the EIC question, which was my primary concern. I am also intrigued by some of the issues raised concerning claiming the 15-year-old as a dependent. I accepted what the client said with respect to not being able to claim the 15-year-old but am beginning to reconsider. We ran some rough numbers and came up short, but I think I'll suggest that if he wants to provide some more info I'll check it out in more detail. It at least deserves a closer look since they are right on the edge with respect to the dependency issue. Thanks very much to everyone who took the time to provide such a wide range of perspectives & opinions. Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.