topic Dependants in Deductions & credits

Dependants

austinleeknobs — Wed, 11 Mar 2020 14:13:41 GMT

The mother of my child is stating I cannot receive EIC for my child even though court decree says I can claim every other year. She says I can only claim as dependant. Any advice as I have already claimed and received my tax refund.

Re: Dependants

DoninGA — Wed, 11 Mar 2020 14:23:19 GMT

See IRS Publication 501 Dependents, Standard Deduction, and Filing Information page 13 - https://www.irs.gov/pub/irs-pdf/p501.pdf#page=13

Children of divorced or separated parents (or parents who live apart).

If statements (1) through (4) are all true, only the noncustodial parent can:
• Claim the child as a dependent, and
• Claim the child as a qualifying child for the child tax credit or the credit for other dependents.
However, this doesn’t allow the noncustodial parent to claim head of household filing status, the credit for child and dependent care expenses, the exclusion for dependent care benefits, the earned income credit, or the health coverage tax credit

Re: Dependants

xmasbaby0 — Wed, 11 Mar 2020 14:24:13 GMT

Which one of you is the custodial parent? Who does the child live with? Or who did the child spend at least 183 nights with? As far as the IRS is concerned that is the custodial parent.

If there is a signed Form 8332, the custodial parent can file as Head of Household and get the earned income credit. The non-custodial parent can get the child tax credit----NOT earned income credit.

Re: Dependants

austinleeknobs — Wed, 11 Mar 2020 15:56:13 GMT

Mother is custodial parent but we have 50-50 arrangement. Twice a week and e/o weekend. I pay child support and medical and judge ordered e/o year I can claim daughter. This is the year. I got refund already

Re: Dependants

KatrinaB48 — Wed, 11 Mar 2020 16:12:35 GMT

The IRS will reward the earned income credit to the parent that has the child for the largest number of nights during the year. You will still get the credit for claiming the child and the child tax credit. You could file an amended return and remove the earned income credit to correct the issue. Please view this TurboTax FAQ and follow the directions to file an amended return.

Note: You need to file this type of return. It is not eligible for e-file.

Re: Dependants

Critter — Wed, 11 Mar 2020 16:12:47 GMT

The court order is ONLY for the dependency exemption which gets you the Child Tax Credit ONLY.

As the non custodial parent (according to IRS rules) you never get the EIC, HOH or the day care credit.

There is no such thing in the Federal tax law as 50/50, split, or joint custody. The IRS only recognizes physical custody (which parent the child lived with the greater part, but over half, of the tax year. That parent is the custodial parent; the other parent is the noncustodial parent.)

Who can claim the exemption and credits depends on who is the custodial parent. (By the IRS definition of custodial parent for tax purposes - this is not the same as the custody that a court might grant.).

The test that the IRS uses to determine the custodial parent is where the child lived for more than 1/2 (or greater part) of the year. The IRS will go so far as to require counting the nights spend in each household - that person is the custodial parent for tax purposes (if exactly equal and more than 183 days - The custodial parent is the parent with the highest AGI, if less than 183 days then neither parent has custody). That can usually only occur if both parents lived with the child at the same time. And yes they are that picky.

The custodial parent may claim everything child related UNLESS they waive the dependency exemption to the non custodial parent via a form 8332.... in that case the child may be used on 2 separate returns but only in the following way :

Only the Custodial parent can claim: (Child would be listed as non-dependent EIC & CC only)
-Head of Household
-Earned Income Credit
-Child Care Credit

The non custodial parent can only claim: (Child would be listed as dependent)
-The Exemption
- The Child Tax Credit

See Special rule to divorced or separated parents (or parents who live apart) on page 32:
https://www.irs.gov/pub/irs-pdf/p17.pdf

But only if specifically specified in a pre-2009 divorce decree, separation agreement or the custodial spouse releases the exemption with a signed 8332 form - after 2009 the IRS only accepts a signed 8332 form that must be attached to the non-custodial parents tax return.

Re: Dependants

Opus 17 — Wed, 11 Mar 2020 16:14:40 GMT

@austinleeknobs wrote:

Mother is custodial parent but we have 50-50 arrangement. Twice a week and e/o weekend. I pay child support and medical and judge ordered e/o year I can claim daughter. This is the year. I got refund already

The IRS determines custody by where the child lives more than half the nights of the year. It does not follow state court orders and there is no such thing as 50/50 custody in a year with an odd number of nights. One parent must have the child more nights than the other.

The parent where the child sleeps more than half the nights of the year is the only parent who can claim EIC. That and the dependent care credit can never be waived or transferred, even though the dependent credit can be transferred.

If the custodial parent is supposed to transfer the dependent to you this year, they must give you a signed form 8332 dependent release. In Turbotax you indicate the child lived with you less than half the year, by choosing 6 months or less in the interview, and that you will receive a form 8332 to claim the child. Turbotax will assign you the dependent credit but not EIC, and you will be required to mail the signed original form 8332 to the IRS along with a cover page after e-filing the rest of the return.

If you answered the child lived with you more than half the year, then Turbotax will give you EIC and the dependent credit without form 8332, but this is incorrect. When the other parent files their return, they will say the child lived with them more than half the year and they gave you form 8332. The other parent will get EIC but will have to file by mail. In about 9-12 months the IRS will investigate both parents, and if you have custody less than half the year and dont have form 8332, you will have to repay the EIC, the dependent credit, and interest and penalties. If you do have form 8332, you will still have to pay back the EIC with interest and late fees.

You need to file an amended return to change your answers on the residency test to less than half the year, and "yes I have form 8332 from the other parent." (The other parent must give you this form if the court ordered it.) You will have to repay the EIC but you will still get the dependent credit. If you file the amended return before April 15, there won't be any interest or late fees on the repayment. Keep copies of everything you file and use a mailing service with tracking and delivery confirmation for your amended return. If your state has state EIC, you may need to file an amended state return too.