A.G. Kalman wrote:

- quote -

I'm still hoping someone can point me to a citation from
either the IRC, Treasury Regulation, IRS ruling or court
decision that denies the EITC to an individual just because
they have a QC.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Mr. Kalman--at first I thought this was a no-brainer, that
the individual would apply for EIC under the guidelines for
anyone who is not claiming a qualifying child. But you are
correct, the rules don't say if you are CLAIMING a child,
only that you HAVE a qualifying child. Page 237 of Pub 17
appears to rule out that person claiming the earned income
tax credit.

One consolation: without a child, the EIC doesn't amount to
much.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

I'm struggling with another aspect of the qualifying child
rules as they relate to the EITC. (Warning to those who
continue to read... this is a long post with complicated
issues.) The issue surrounds the case where two or more
individuals have the same qualifying child. In this event
one or two things can happen: 1. They can agree among
themselves as to who will claim the exemption and the other
tax benefits that go with being a qualifying child. 2. They
can't agree and multiple taxpayers claim the same child
triggering the tie breaker rules.

Let's assume we have the case where a grandson (age 10) is
living with his mother (age 35) and grandmother (age 55) in
the same home and is the QC to both the mother and
grandmother. Let us also assume that they agree that the
grandmother will claim the exemption and the tax benefits
that go with it as the grandmother's income is such that
they get the best tax benefit this way. The grandmother's
earned income and AGI are such that she is eligible for the
EITC with a qualifying child. At this point everything is
hunky dory.

The question on the table is whether the child's mother is
eligible for the EITC without a child. Assume that the
mother has $5000 of wages. If you read the IRS guidance in
the pubs, the answer is a resounding no. In fact the pubs
actually discuss this situation.

Here is a quote from Rule 9 Your Qualifying Child Cannot Be
Used By More Than One Person To Claim The EIC. Note the last
sentence.

You can choose which person will claim the EIC. If you and
someone else have the same qualifying child, you and the
other person(s) can decide which of you, if otherwise
eligible, will take all of the following tax benefits based
on the qualifying child.
• The child's exemption.
• The child tax credit.
• Head of household filing status.
• The credit for child and dependent care expenses.
• The EIC.
The other person cannot take any of these five tax benefits
unless he or she has a different qualifying child.

Later in the same Rule 9 it starts to discuss the tiebreaker
situation. Note the last part of the paragraph.

If another person claims the EIC using this child. If your
EIC is denied because your qualifying child is treated under
this rule as the qualifying child of another person for
2005, you may be able to take the EIC using a different
qualifying child, but you cannot take the EIC for people who
do not have a qualifying child.

The IRS has addressed both situations: agreement and
multiple claimants. And in both situations, states that the
taxpayer who does not get the benefit can not claim the EITC
as a taxpayer without child. Please be aware that prior to
2005, the pubs contained the same statement regarding the
loser of any tie breaker.

The pubs also have an example (#9) that uses unmarried
parents and the use of the tiebreaker. Example 9 goes on to
say that the parent who loses the tiebreaker test can not
claim the EITC for persons either with or without a
qualifying child.

I can not find anything in the IRC or conference report that
denies the otherwise eligible individual the EIC under the
no child rule.

I did find in the conference report the following
information relating to tie breaker rules:

Tie-breaking rules
If a child would be a qualifying child with respect to more
than one individual (e.g., a child lives with his or her
mother and grandmother in the same residence) and more than
one person claims a benefit with respect to that child, then
the following "tie-breaking" rules apply.

First, if only one of the individuals claiming the child as
a qualifying child is the child's parent, the child is
deemed the qualifying child of the parent. Second, if both
parents claim the child and the parents do not file a joint
return, then the child is deemed a qualifying child first
with respect to the parent with whom the child resides for
the longest period of time, and second with respect to the
parent with the highest adjusted gross income. Third, if the
child's parents do not claim the child, then the child is
deemed a qualifying child with respect to the claimant with
the highest adjusted gross income.

Note the reference to the words "deemed the qualifying child
of the ..." Does this mean that once the decision is made to
deny the exemption to one taxpayer because the child is
deemed to be the QC of the other taxpayer, the child is no
longer deemed to be a QC to the other taxpayer? Apparently
not. In addition, as I stated much earlier, I can not find
any specific reference to denying the EIC to someone who
files for the EIC without a qualifying child.

Does anyone know the basis for the guidance stating that you
can't get the EIC as an individual without a child, if you
have a qualifying child that you cannot use as a QC?

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >