EIC but not claim child

[mrumsey72]

I let my ex claim my daughter as a dependent this year on his taxes.  I filed my taxes, then I found out that I was able to claim the EIC for her even though I didn't claim her as a dependent.  So, I amended my taxes and TurboTax seemed to walk me through it accurately.  It said I could not claim her as a dependent but that I was able to claim her for the EIC.  It seemed pretty straight forward.  I finally was able to talk to someone that works with TurboTax and she had me link it so she was able to look at my amended taxes before I sent it in and told me that I was not able to claim her for the EIC because she's not a dependent??? I just want to get them done correctly, I filed a month ago now and am very fed up. I am not going to send in my amended taxes if it's incorrect and at this point I'd rather just go to someone to do my taxes even though I already paid $100 on here.  Please someone who knows what they're talking about help me.

[lorbele]

Would this apply to a single grandmother and her single daughter and newborn, without a father on the birth certificate? The daughter get the child tax credit, grandmother get EIC and HOH?

[Hal_Al]

No. The special rule is only for the parents, and they must not be living in the same household.
In the case of a grandmother, mother and child living in the same household, either the mother or grandmother can claim the child. The grandmother must have a higher income, than the mother, to do so. Whoever claims the child claims  the child tax credit and EIC  (and dependent care credit, if applicable). The other can claim nothing. Whomever's home they are living in can claim HoH, but only if she has a qualifying dependent.

[Hal_Al · Accepted solution]

What you haven't said is where the child lives. That is, whether you are the custodial parent. If you are, you can claim EIC. You can also claim Head of Household filing status and the dependent care credit, if appropriate.

So, " not able to claim her for the EIC because she's not a dependent" is WRONG. But  if TT support said  you are not able to claim her for the EIC because you are not the custodial parent, that would be correct. If you are the custodial parent, so ahead and file your amended return.

 There is a special rule in the case of divorced & separated (including never married) parents. When the non-custodial parent is claiming the child as a dependent/exemption/child tax credit; the custodial parent is still allowed to claim the same child for Earned Income Credit, Head of Household filing status, and day care credit. This "splitting of the child" is not available to parents who lived together at any time during the last 6 months of the year; then only one of you can claim the child for any tax reasons. The tax benefits may not be split in any other manner.

Note in particular that the non-custodial parent can never claim the Earned Income Credit, Head of Household filing status or the day care credit, based on that child, even when the custodial parent has released the exemption to him.

 So, it's good idea to let the other parent know that you will be claiming those items, as many first time divorced parents are not aware of this rule and may try to claim those items, which will cause the IRS to send out letters.

Ref: http://www.irs.gov/publications/p17/ch03.html#en_US_2014_publink1000170897 Scroll down to "Children of divorced or separated parents (or parents who live apart)"

[WowWhat]

But what if the custodial parent wants to remove the EIC? This is the first year the non custodial parent was supposed to claim child for dependent credit, and already filed. Clearly misunderstood but also used TurboTax, so I'm not sure how this happened. But I need to file my taxes, they've been rejected, and I don't care if he wasn't supposed to get the EIC, I just want to file my taxes!! But I can't see how to remove it without claiming I wasn't the custodial parent, but that's not true. I am.

[Hal_Al]

It's not optional. Even if you could find a work around to get TT to get rid of it, you would still be prevented from e-filing

[WowWhat]

So is the only answer to paper file, claim the EIC, and then my refund gets held up while my ex is in trouble with the IRS even though he was clueless and I should have helped him with this? I did help some, sending him the dependent care info since I assumed he'd need it, but if I had done my taxes two months ago when he did his, we wouldn't be in this situation. I'm just baffled about how Turbotax let this happen.

[Hal_Al]

Yes, the only answer at this point is to paper file. He's not in trouble with the IRS (yet). He has to file an amended return, unclaiming the EIC. Your refund  will not be held up.
Actually you didn't help him by sending the dependent care info. He's not allowed to claim that either. So, he'll have to remove that as part of his amendment.

[WowWhat]

I meant to tell you thank you -- we both wen to meet with his new tax accountant (neither of us will be using TurboTax again after this, so I'm going to use the guy too in the future after this year) and he agreed with what you said. Got it all sorted out for us! Thanks.

[mistercm83]

So I just had a similar situation come up.  I'm divorced and have been the past 2 years. This year when I tried to claim the eic, it said my dependent did not qualify for taxes period, so I sent in a paper return. When I got my return I found out the removed my EIC which I believed I had the right to do.  When you said, " This "splitting of the child" is not available to parents who lived together at any time during the last 6 months of the year;", would the fact that we lived together during the year even after our divorce Make it so I could claim the eic and dependent of the child?  What would I need to show the Irs possibly to prove this?

[Hal_Al]

@mistercm83 : yes, the fact that you lived together, even if legally divorced, prevents you from splitting the tax benefits. Only one parent can claim the child on his/her taxes.  But, it can be either of you (so long as the child lived with you more than half the year, 183+nights) and you can agree on which parent will claim the child. If you can't agree, then there are "tie breaker" rules that govern.

"What would I need to show the Irs possibly to prove this?"  You need to show that the other parent didn't claim the EIC, based on that child.  You may also  have to prove that the child lived with you. 

[Brich22390]

Ok im so lost and really hope this can be sorted out rather easily. So i filed my taxes just like i do every year fill out the info answer the questions and hit continue on. It asked me if i had a child in the last year which i have so i said yes. Then it said great let's see if we can add them as a dependent. It proceeded to ask me the questions have you adopted or had a child? Has the child lived with you for more then 12 months? Finally Do you have an agreement with the other parent that they are going to be claiming the child on their taxes? Yes yes and yes. Then it says with the info given you do not qualify to claim this child as a dependent. In the fine print it states that you might be able to qualify for savings however and has the option of continuing or going back to the previous question. When i hit continue it asked for my child's ssn then had the option of continuing or going back to the you don't qualify screen. So i entered my child's ssn hit continue and that was it moved on to the next section. After everything was finalized it said that i was receiving a non dependent eic. So i thought nothing of it i figured i didn't qualify to claim my child because i had an agreement with the child's other parent that they were going to be the claiming them and that i had made that clear and everything was fine. so i hit the send button. Now my gf who claimed her at work on her taxes for the whole year finally got all her w2s in goes to file and claim our as planned gets her taxes rejected because our childs ssn is on my tax return. So with all that being said i have a few questions. What is a non dependent eic? Why after i said that i wasn't claiming our child and that i had an agreement with the other parent that they were going to claim them did it then ask for my childs ssn if it was going to interfere with the other parent to where they wouldn't be able to claim said child? What can i do to fix this issue? Finally who is at fault? In my opinion i believe TurboTax is at fault because if a parent states that they have an agreement and that they are not trying to claim a child on their taxes then the option too put a ssn if its going to make it so the parent that is supposed to claim the child cannot do so then that option shouldn't even be offered at all 

[Hal_Al]

@Brich22390 A common error is when unmarried parents live together,  If you and the other parent live together, only one of you can claim the child for any tax benefit. The interview is confusing (it's designed for divorced parents, who are allowed to split the child). The second parent should not enter the child, at all.

If you and the other parent live together, either one of you (but not both) may claim the child. You may decide between you which one will claim the child. Only if you can’t agree, do the IRS tie breaker rules apply, to see who has first choice. It may be worthwhile to prepare trial returns, both ways,  to see which way the family comes out best. This tool may be useful:https://turbotax.intuit.com/tax-tools/calculators/taxcaster/?s=1.

Q. What can i do to fix this issue?

A.  Your girl friend will have to mail in her return.  She can NOT e-file.  You wait to you get your refund. Then you file an amended return to unclaim what you claimed. She can file now, she does need to wait for you to amend

Q. Finally who is at fault? 

A.  "The system". As stated, the interview is complex, but it can handle the situation, if all questions are answered correctly. It requires reading the "fine print".

[Hal_Al]

@Brich22390 

Btw, the fact that your  gf  claimed her at work (form W-4)  for the whole year, does not "lock in" who can claim the child at tax time.  Either one of you (but not both) can claim the child.  So, run the numbers to see which way comes out best.

[DMarkM1]

The non-custodial parent can claim the dependent after you have claimed the non-dependent EIC.  Ex-spouse should follow these steps. 

1.  Click "My info" in left hand menu

2.  Click "Edit" next to the dependent they wish to claim

3.  Answer the initial questions and put in information

4.  When they get to number of months lived with them, put in something less than 6 months

5.  Continue answering questions until they get to "Do you have an agreement..."  Click "Yes"

6.  The next question asks if other parent is claiming the child, answer "No"

7.  Continue answering questions and be sure at the end that the child does NOT qualify them for head of household.

If the ex-spouse has another dependent that qualifies them for head of household that is ok, just not your dependent.

Your ex-spouse will need a copy of the form 8332 that you have signed giving away the exemption.  That form 8332 will need to be mailed in.

If your ex-spouse is filing their return electronically, they must file Form 8332 with Form 8453, U.S. Individual Income Tax Transmittal for an IRS e-file Return. Here is a link with form and instructions for the form 8453 that must accompany the 8332.  It has the address to send the forms to as well.