The children did NOT live with me for the last six months. Is this even
legal?
It is not. Only the custodial parent can claim EIC. The custodial parent is the parent the child lived with for more than 183 days in 2016.
What would be the penalty if I did it and was caught?
Knowing that it's illegal, why would you even try?
(You may be able to claim the children as qualifying relatives if you provided more than 1/2 of their support. You can't claim EIC for a qualifying relative but you can claim their exemptions.)
