Dependent tie breaker rules

[ColinW1972]

Hi all,

I'm filing per publication 504 as I'm legally separated.  We are both wanting to claim our 21 year old son who is a college student and didn't work the entire year.  I meet all the requirements for HoH status except for the dependent possibly.  He did live with me for 8 months, so I was going to apply the tie breaker rules.  However I did notice a note about emancipated child in this publication.  He is considered emancipated (18 years old in my state), therefore per the pub he is considered NOT living with either parent.

Emancipated child.
If a child is emancipated under state law, the child is treated as not living with either parent.
See Examples 5 and 6.

If that's the case and per the tie breaker rules, which apply to my situation?  We are filing separately, we are both his parents, technically because he was emancipated the whole year we both earn 0 days, and my AGI was much higher than my ex's.  How do the tie breaker rules get applied in this situation? 

Thanks for any input.

[Opus 17]

If the emancipated rule means that he is not considered to live with either parent, then he can't be a qualifying child dependent.  He can be a qualifying relative dependent of whichever parent pays more than half his living expenses, but only if his taxable income is less than $4300.  If his taxable income is more than that amount, or if neither parent paid more than half his living expenses, then neither parent can claim him as a dependent. 

[Hal_Al]

You're misinterpreting the emancipation lives with rule. There is no "custody" once a child reaches the age of emancipation. The IRS rules now govern. Even though a child is not legally a minor at age 18 (in most states), under IRS rules, the child of a taxpayer can still be a “Qualifying Child” (QC) dependent, regardless of his/her income, if:

1. He is under age 19, or under 24 if a full time student for at least 5 months of the year, or is totally & permanently disabled

2. He did not provide more than 1/2 his own support. Scholarships are considered third party support and not as support provided by the student. Note that there is no requirement that you provided support.

3. He physically resided with the parent (including temporary absences such as away at school) for more than half the year.

If he lived with both parents for more than half the year, then the tie breaker rules say the parent he lived with the most gets to claim him.  That rule trumps the higher AGI rule.

Side issue: if still married, you only qualify for head of household if you lived apart the entire 2nd half of 2020. 

[Opus 17]

The problem with that interpretation is that the emancipation rule does not say “default to the normal rules“, it says that the child is treated as not living with either parent. Example 6 seems instructive here.  In example 6, the child lives with parent number two for more than half the nights of the year, but is treated as a qualifying child of parent number one because the child lived with parent number one for more than half the nights of the year before the child turned 18. If the answer was simply to default to the normal rules, the child in example 6 would be the qualifying child of parent number two.

Here, if the child is 19, they turned 18 last year.  I agree that it would seem more logical to default to the normal rules when the child turns 18, but it is not clear to me that is the case.

[ColinW1972]

I agree with that statement and also example #5.  Once the child was emancipated (18 years old in my state) he was not considered living with the parent any longer.  In example #5 it's pretty clear that the child did not qualify the parent for the 6 month rule since the child was emancipated prior to the 6 month mark.  My situation is similar, except my kid was 21 years old for the whole year (22 the last two days).  My ex claimed him as her qualifying child but I think she can only claim him as a qualifying relative.  And if that's the case, she can't claim him since I paid more than 50% of his expenses for the year.  I would get to claim him as a qualifying relative and she would not be able to use him as a dependent.  

[Opus 17]

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@ColinW1972 wrote:

I agree with that statement and also example #5.  Once the child was emancipated (18 years old in my state) he was not considered living with the parent any longer.  In example #5 it's pretty clear that the child did not qualify the parent for the 6 month rule since the child was emancipated prior to the 6 month mark.  My situation is similar, except my kid was 21 years old for the whole year (22 the last two days).  My ex claimed him as her qualifying child but I think she can only claim him as a qualifying relative.  And if that's the case, she can't claim him since I paid more than 50% of his expenses for the year.  I would get to claim him as a qualifying relative and she would not be able to use him as a dependent.  

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If you file a tax return that conflicts with your ex, the IRS will send letters to both of you asking for proof and an explanation.  You may be on solid ground but I am not an attorney.  

[DMarkM1]

Emancipation is a court order that allows a child less than the age of majority (18 or 19 in most states) to assume all the rights and responsibilities of adulthood.  Where are you getting an interpretation that your son has been "Emancipated"?  

The emancipation reference in the IRS publication concerns the the 16 or 17 year old who has been "Emancipated" by the court.    

[Hal_Al]

@ColinW1972 

Please report back here to let us know how the IRS decides this issue.  To my knowledge, we have not had the results of an actual case reported in this forum. 

[ColinW1972]

I don't think the rule actually says that.  In fact, it only says:

Emancipated child.
If a child is emancipated under state law, the child is treated as not living with either parent.
See Examples 5 and 6.

In my state, South Carolina, you are emancipated by state law at the age of 18, regardless if you go to court or not.  So if you are automatically emancipated by state law........you would be treated as not living with either parent per this rule.

[ColinW1972]

You betcha.

[Opus 17]

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@DMarkM1 wrote:

Emancipation is a court order that allows a child less than the age of majority (18 or 19 in most states) to assume all the rights and responsibilities of adulthood.  Where are you getting an interpretation that your son has been "Emancipated"?  

The emancipation reference in the IRS publication concerns the the 16 or 17 year old who has been "Emancipated" by the court.    

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Emancipation is a court order freeing a child from their parents' control.  It is also the legal term for "coming of age" or "being a legal adult" and occurs at age 18 in most states, although there are a few exceptions.  (See for example here, https://www.law.cornell.edu/wex/table_emancipation)

Specifically, IRS examples 5 and 6, which are found on page 13 of Pub 501 

https://www.irs.gov/pub/irs-pdf/p501.pdf

and on page 10 of Pub 504 (exact same language)

https://www.irs.gov/pub/irs-pdf/p504.pdf

specifically say "When your son turned age 18".  I can't find an emancipation references to a 16 or 17 year old in either publication 501 or 504. 

[ColinW1972]

I got the answer from the IRS tax law experts!  If a child is at the age of majority (emancipated) under state law, they are considered NOT living with either parent.  In my case, since the child was 21 years old most of the year, he is considered not living me me or my ex.  Therefore under the tie breaker rules the rule about whom the child lived with longer does not apply.  In my case the next rule would apply which is based on the higher AGI for the year.....which is me.  So I actually get to claim the child and my ex does not.

The IRS tax law expert had to research this quite a bit as well, but that was their conclusion.

[Critter-3]

Correct ... due to the child's age the tie breaker rules don't apply so the regular dependent child or relative dependent rules apply. 

[ColinW1972]

That is NOT what the IRS said.  The tie breaker rules DO apply since me and my ex met the qualifying child requirement.  You must apply them in the order they appear.  For my case, we have to file separately, we are both considered parents, the child did NOT live with either of us (emancipated rule), so the next rule applies which is neither of us could claim him so the person with the higher AGI gets to.  

The IRS ran both me and my ex through their system and it came back that the tie breaker rules must be used.

Hope this helps cause that emancipated rule is confusing a lot of people I think.  Just remember that if a child is of age in their state, the days don't count.

[Critter-3]

The following guidelines are necessary for someone to claim a dependent...  so only one of you can claim the child and if you both try to claim the same child then the tie breaker rules come into play ONLY if you live together with the other parent ... if you live separately then the child can only qualify to be one person's dependent ... also the HOH rules will also come into play :

Qualifying Child Dependent:

• The child must be related to you. The child can be your son, daughter, stepchild, eligible foster child, brother, sister, half-brother, half-sister, stepbrother, stepsister, adopted child or an offspring of any of them.
• Your child must be under age 19 or, if a full-time student, under age 24. There is no age limit if your child is permanently and totally disabled.
• Your child must live with you for more than half the year, but several exceptions apply (ie. away at school).
• The child cannot provide more than half of his/her support.
• You must be the only person claiming the child
• The child must be a US citizen, resident alien, national, or resident of Mexico or Canada.
• The child cannot file a joint return with his or her spouse.

Qualifying Relative Dependent: 

• You provided more than half of their support.
• They made less than $4,000 in gross income.
• They live with you or they are related to you.
• They aren’t a dependent on someone else’s taxes.
• They aren’t doing their taxes with a spouse (married filing jointly).
• They are a U.S. citizen, resident alien, national, or a Canadian or Mexican resident.

HOH rules :   

Even if you were legally married as of December 31, you are considered unmarried (and therefore eligible for Head of Household) if all 5 of these conditions apply:

1. You won't be filing jointly with your spouse; and
2. Your spouse didn't live in your home after June (temporary absences due to illness, school, vacation, business, or military service don't count); and
3. Your home was your child's, stepchild's, or foster child's main home for more than half the year (non-child dependents in your home don't qualify); and
4. You paid more than half the costs of keeping up your home during the tax year; and
5. You meet the qualifications to claim the child as your dependent, even if the other (noncustodial) parent is actually claiming the child as a dependent on their return.

https://ttlc.intuit.com/community/family/help/what-is-a-qualifying-person-for-head-of-household/00/2...