Unmarried (parents), living together with one child, filing seperately. Do both parents get the EIC?

[manwilln]

Very confused. Turbotax allows one parent as head of household with one dependent claim the EIC credit. And Turbotax also allows the other parent to claim the EIC (even though they said that the first parent will claim the depenent).

[Jimesa · Accepted solution]

In this case, only one of you would be able to claim your child on his/her tax return. Since the program is unaware that the other person is listing the child on his/her return during the interview, it is calculating EIC for both of you. The other parent shouldn't list the child at all on his/her return because dependents can only be claimed by one person according to the IRS and if you both try to e-file your returns with the child listed on both, then 1 return would be rejected. Either you all can decide/agree on who claims the child for this tax season or you can see the information below to help you all decide: 

http://blog.turbotax.intuit.com/tax-deductions-and-credits-2/family/who-can-i-claim-as-a-dependent-7...

https://turbotax.intuit.com/tax-tools/tax-tips/Family/Rules-for-Claiming-a-Dependent-on-Your-Tax-Ret...

[manwilln]

Fantastic! Very helpful. You are a saint!

[Jimesa]

Happy to help!

[Taxatron]

Attempting to understand if part of TurboTaxJimesa's answer is incorrect. It would appear that it might be possible for the first parent to allow the second to claim the child for split tax benefits. My proposed scenario: 

Yes, only one parent can *claim* the child as a dependent, but the other parent absolutely can and should *list* the child on his/her return for the sake of obtaining the EIC and dependent care credit. This is accomplished by the parent with dependent claim rights transferring the dependency exemption to the other parent via an agreement (e.g. Form 8332). For example, the below is allowed:

    Parent 1: HoH, not claiming child (allowing other parent to claim child), child listed as lived with whole year
    (Eligible to claim EIC and dependent care credit).

    Parent 2: Single, claiming child, child listed as lived with whole year
    (Eligible to claim EIC, dependent exemption, and child tax credits).

Only one person may claim the EIC, but both can *qualify* to claim it in the above manner, and you certainly should, as listing the child without claiming the child as a dependent in this manner makes you eligible for lucrative benefits (e.g. Head of Household status, EIC, dependent care credit).

[Howard1948]

I'm sorry weslilient, but you are incorrect.  When a child is the qualifying child dependent of more than one person in the same household, only one person can claim the child as a dependent and that person is the only one who can claim the other benefits of the dependent, including the EIC, CDCC, CTC, etc.  You cannot split the child benefits among the potential claimants and more than one person cannot claim the same benefits.  The only time that benefits can be split is if the custodial parent transfers the dependency exemption to the noncustodial parent.  Then the noncustodial parent can claim the dependency exemption and the CTC while the custodial parent can claim the EIC and CDCC.  But this does not apply when both parents are custodial parents in the same household.

[Taxatron]

Thank you for the clarification, Howard1948. Please ensure we understand correctly:

The situation I am referring to above is, as you say, where the custodial parent transfers the dependency exemption (via agreement) to the noncustodial parent. This is what allows the split of tax benefits. I have edited my answer above such that it now calls this transfer out as necessary.

You are saying, though, that the custodial parent cannot allow the other to claim the child if both parents reside in the same household? What allows for the dependency exemption transfer, then? The two parents must live in different households?

The 1040 filing instructions say this, in part:

<begin excerpt>

     "A child will be treated as the qualifying child or qualifying relative of his or her noncustodial parent (defined later) if all of the following conditions apply:

     1. The parents are divorced, legally separated, separated under a written separation agreement, or lived apart at all times during the last 6 months of 2016 (whether or not they are or were married)."

</end excerpt>

The wording of this requirement (1) is vague, as it seems to allow for a written "separation" agreement to be in place where the parents can still live together. Is this correct? A separation agreement with the parents still living together appears to allow the custodial parent to allow the noncustodial parent to claim the dependent, all while both parents still live together in the same household. Is this correct, or does "separated under a written separation agreement" imply that the parents must have once been married, and are no longer living together?

[Howard1948]

if both parents live in the same household, then both are custodial parents.  Thus, there is no "transfer" needed as both qualify.  They can chose who is going to claim the child.  If they cannot agree, the IRS has a set of "tie-breaker" rules that are used to determine who is entitled to claim the child.  Those tie-breaker rules are also included in IRS Publication 501.

[Lyndaj]

Just to confirm - i have both parents living together.  they are unmarried.  The parent making too much money for EIC can file as HOH and list the child to get the increased standard deduction; and the other parent can file single, list the child as a dependent and take the EIC with the lower standard deduction?

Thank you

[Opus 17]

@Lyndaj 

Under no circumstances.

this thread is years old, and the 2019 date is probably just a date that it was transferred to the new board software. I did not review the entire thread for accuracy, just your question. However, in the case of unmarried parents living together and sharing custody, only one parent may claim the child and all the tax benefits of that child, the other parent can claim nothing. The special rules that allow the benefits of a dependent to be split between two parents only apply to children whose parents are divorced or separated and live apart and share custody.

In TurboTax, the parent who will claim the child will say that the child lived with them for more than half the year and that they do not have a custody agreement with the other parent. The custody agreement question only applies to a legal or court order between parents who are divorced or separated and does not apply to a voluntary understanding between parents who live together. The other parent should not list the child on their tax return at all.

In the case you described, the parent who paid more than half the household expenses could file as head of household by claiming the child but would not qualify for EIC because of their income. Or, the parent who paid less than half of the household expenses can file as single and claim the child as a dependent and possibly receive EIC, but not both.