Turbotax says no to Earned Income Credit, IRS says yes; watch out Turbotax users!

[rittiar]

Turbotax Premier 2021 said my son did not qualify for the Earned Income Credit because of his age. After filing, he got a letter from the IRS saying that their records show that he does qualify for it. He was asked to review publication 596 and then submit a form to get the credit which he did.  Clearly he qualifies for the credit, which we would have never known had the IRS not contacted him about it.  So much for the Turbotax guarantee of a maximum refund.  Watch out Turbotax users!

[KrisD15]

I think maybe YOUR TurboTax program told you that he did not qualify for YOUR EIC. 

In other words, the credit is based on the number of children you claim (besides other things)

How old is your son?

Is he a student?

Did you claim him or did he file as a non-dependent?

Did he file Single and did he use TurboTax for his filing? 

[rittiar]

He filed single and claimed himself only.  I filed single and claimed myself only.  For 2021 and 2020.  We both use Turbotax.  

[SweetieJean]

If he was eligible to be claimed as your dependent (whether you actually claimed him or not), he does not qualify for EIC.

[rittiar]

He provides more than half of his own support, so how would he qualify as a dependent of mine? 

[rittiar]

And what really gets me is that he gave Turbotax all of these answers.  He told the product that he provides more than half of his own support and therefore in the Personal Info section it shows him as providing more than half of his own support, filing single, and claiming himself as a dependent.  Yet in the EIC worksheet it says that without a qualifying child of his own, he is under the age to be eligible.  He is 22, was a student at least half of the time in 2021, and provided more than half of his own support.  Turbotax help says the following.  I do not provide more than half of his support and cannot claim him as a dependent.  The Turbotax product knew this because he claimed himself as a dependent.  This was also true in 2020 so now I think he was denied that credit, too.

Rules for Claiming a Dependent on Your Tax Return - TurboTax

The IRS defines a dependent as a qualifying child under age 19 (or under 24 if a full-time student) or a qualifying relative who makes less than $4,300 a year (tax year 2021). A qualifying dependent may have a job, but you must provide more than half of their annual support.

[DMarkM1]

The question in TurboTax is "Can you (taxpayer on the return) be claimed as a dependent on someone else's return?"  Your son on his return would need to answer "Yes" or "No".  If he answered "Yes" then he is not eligible for earned income credit (EIC).  

Next.  If he answered "No" then based on his age he would be asked "Are you a full-time student?"  He would answer "Yes" or "No"  If yes, then based on his age and student status he would not be eligible for EIC because as a student you need to be at least age 24.  

If he answers "No" he is not a student then he would be eligible for EIC at age 19 assuming he meets the other income and residency requirements.  

The IRS does not know one's student status; it is not reported on the tax return.  So according to what the IRS knows (age, income, and filing status) they would notify him of the potential credit.  

Again if he indicated in TurboTax that he was a student under age 24 he would not be eligible for EIC.  

Below is an extract from the IRS Newsroom.  You can view the link for more information.  

To qualify for the earned income credit without dependent (single filers). 

• Be at least age 18 at the end of the tax year (usually Dec. 31)
  • The minimum age to claim the EIC is generally age 19; however, if you are a qualified former foster youth or a qualified homeless youth, you need to be at least age 18.
  • If you are a specified student (other than a qualified former foster youth or a qualified homeless youth), you need to be at least age 24.

[rittiar]

The clip from Turbotax that I included in my first post says about the age and student thing and then it says that for him to be a qualifying child, someone else has to provide more than half of his support.  He provides more than half of his support.

[AliciaP1]

Your statement "and then it says that for him to be a qualifying child," means he inadvertently reported that he could be claimed as a qualified dependent on someone else's return in error.  Since the IRS made the correction for him, you have nothing else to worry about.

@rittiar