robert.s.bauer wrote:
- quote -

Second the notion. You are correct.

ChEAr$,
Harlan Lunsford, EA n LA

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"gassyal" <gassyal[at]hotmail.com> wrote:

- quote -

As I recall, in your case all children in the household were
parented by the same two people. The situation you read
about is probably two parents, each with a child parented by
someone other than the other adult in the house.

--
Phil Marti
Clarksburg, MD

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Hi Tim:

Your suggestions are different from Phil Marti, A.G. Kalman
and Rudy.

You imply that if a certain Section of the Internal Revenue
Code is satisfied, then my grand-daughter would be able to
take the Exemption for a Dependent and therefore obtain the
Child Credit.

It's not clear what IRC Section you are referencing to.

Your posting says, in part: "...long as IRC =A7152(e) is
satisfied."

At the URL:

http://www.fourmilab.ch/uscode/26usc/www/sections.html

I was unable to locate Section 7152.

Does the IRC Section reference need correcting?

Regards,
Al Gershen
Inactive C.P.A.
Grants Pass, OR
gassyal[at]hotmail.com

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Hi Phil Marti, A.G. Kalman, Tim Kelly and Rudy:

I appreciate all your opinions on this matter which I just
read today, Sunday, March 19th, for the first time.

Earlier in the week, after contacting in person two (2) CPA
firms in my community, I did the following:

1. I corrected my grand-daughters return by removing the
Child Care Credit data. Therefore, she files as single with
no other Child attributes. Her Federal return has been
accepted and I assume the State return will also be accepted
shortly.

2. I didn't correct or amend her boyfriend's return because
his taxable income was very low (reduced by the Standard
Deduction and two Exemptions). His low Tax was reduced to
Zero by the Child Care Credit on 50% of the Child Care
expenses. If I took the other 50% of these expense, it
wouldn't change anything.

Likewise, with only 50% of the Child Care Expenses, his
Additional refundable Child Credit was already maxed out
(based on a percentage of his qualifying income over
$11,000). Therefore this Additional refundable Child Credit
would not increase with the additional 50% of Child Care
Expenses.

While doing my Internet research on this matter, it seems
that I came across a Federal court decision that implied
under certain factual circumstances that the Head of
Household status may be taken by both unmarried spouses. I
should have saved the URL but I didn't and I could locate it
again.

If you have some followup comments, they will be appreciated.

Regards,
Al Gershen
Inactive C.P.A.
Grants Pass, OR
gassyal[at]hotmail.com

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LTSLLC wrote:

- quote -

My understanding is that the IRS will use the "tie breaker"
rules only if more than 1 taxpayer claims the QC. If the
taxpayers decide between themselves and only 1 taxpayer
claims the child, the IRS will not get involved.

Bob Bauer

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LTSLLC wrote:

- quote -

You are misinterpreting page 21 of the Form 1040
instructions. It says the IRS will apply the tie-breaker
rules "if you and any other person claim the child." It does
NOT say if you and any other person ARE ELIGIBLE to claim
the child. If the parents agree, so that only one person
claims the child, then the IRS will not apply those rules.
Publication 501 gives a much clearer, explicit statement of
this. It says, on page 12:

"If you and another person have the same qualifying child,
you and the other person(s) can decide which of you will
treat the child as a qualifying child."

"If you and the other person(s) cannot agree on who will
claim the child and more than one person files a return
claiming the same child, the IRS will disallow all but one
of the claims using the tie-breaker rule...."

Bob Sandler

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The advice that the parents can agree on who can claim the
child are incorrect.

Since the child is the qualifying child for the boyfriend
and your grand-daughter for all of the issues you cited
(except for the Head of Household filing status as I am
assuming that the boyfriend and not your grand-dughter paid
over 50% of the costs of keeping up the home), then only the
boyfriend can claim the child since he has the higher
adjusted gross income.

See page 21 of the Form 1040 Instructions.

You filed the boyfriend's return correctly but if he paid
for all of the child care expenses, then you should file
Form 1040X to claim the 50% of the expenses you reported on
your grand-daughter's return. If he is getting a refund,
wait until he actually gets the refund check before you file
the 1040X.

You would file your grand-daughter's return with her as
single and no dependents or any credits.

Rudy
www.lizcanotaxservicesllc.com

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Nothing prevents the parents from dividing the HOH filing
status from the dependent exemption as long as IRC =A7152(e)
is satisfied. The HOH parent would still be the only one who
could claim childcare credit and EIC while the parent with
the exemption gets the credit.=20

Tim

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gassyal wrote:

- quote -

As they both are the parents of the child and are all living
together, you have two taxpayers with the same qualifying
child. The two parents can agree among themselves who is
going to claim the exemption. Once the decision is made all
the other tax benefits flow to the parent who claims the
child. This would include the ability to file as HOH, the
child tax credit, the earned income credit and the child and
dependent care credit. The parents can not share these
benefits. That is why the IRS rejected your daughter's
return. In those cases where the two parents can not agree
on who is going make the claim and the child lived with both
parents for the same amount of time in the year, the
tie-breaking rule would give the tax benefits to the parent
with the higher AGI

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"gassyal" <gassyal[at]hotmail.com> wrote:

- quote -

Oddly enough, there's no separate publication. The details
about filing status and dependents are in IRS Publication
501.

- quote -

Fine so far, but there was no point to limiting his child
care expenses, as you found out later.

- quote -

Can't do that. In the scenario you describe one parent, and
only one parent, can use the child for all of the five tax
benefits:

Head of Household filing status
Dependency Exemption
Child tax credit
Child care credit (Publication 503)
Earned income credit

They're free to pick which one uses the child, but they
can't play King Solomon and divvy the child up.

--
Phil Marti
Clarksburg, MD

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I filed separate income tax returns (Federal & Oregon) for
my grand-daughter and her boyfriend for CY 2005. They live
together and have a son who was one year old at 12/31/05.

I prepared the returns on taxslayer.com and they were filed
electronically.

I tried to find a Federal Tax Publication that deals
strictly with the filing options for unmarried taxpayers
with children but I couldn't find one.

Here's how I filed the returns:

Boyfriend with wages of $14,000: Filed Head of Household
taking an exemption for the dependent son; taking Earned
Income Credit; taking the Credit for Child Care Expenses on
50 % of such expenses paid; and taking the Child Tax Credit
(or additional credit).

Grand-daughter with wages of $12,000: Filed Single; taking
the Credit for Child Care Expenses on the remaining 50% of
such expenses paid.

Results: The boyfriend's tax returns were accepted by the
IRS and Oregon. My grand-daughter's Federal return was
rejected by the IRS because the child is taken on the
boyfriend's return. No word yet from Oregon on my
grand-daughter's return but I assume it will be rejected
also.

Assuming I can amend the boyfriends returns, if necessary,
and change my grand-daughter's returns, what are the filing
options I have for treating the the Earned Income Credit,
the Credit for Child Care Expenses, and the Child Tax
Credit?

Your comments would be appreciated.

Regards,
Al Gershen
Grants Pass, OR
Inactive CPA
gassyal[at]hotmail.com or
aldg01[at]gmail.com

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