My daughter didn't earn enough to file this year. Can I add my grandchildren to my return to get the EIC for them?

[azrael2]

My daughter is divorced and her ex-husband has relinquished all parental rights to the children. She didn't earn enough to file for taxes this year (2016) and has asked me to add the kids to my tax return in order to get the EIC and then give it to her. The children did NOT live with me for the last six months. Is this even legal? What would be the penalty if I did it and was caught?

[bwa · Accepted solution]

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.)