I have a couple not married own a house and have a child. the man get the house deduction filing single, the woman get the child filing HH. now they want to switch since the man make lesser money this time, for the sake of EIC. I need suggestions
woman has been claiming HOH eversince, she can still claim head of household because she still have another child from the previuos marriage. my main concern is the man who has been claiming the house single file now is the otherway around. the guy wants to claim the child to get EIC and be HOH too. Now I said NO, no way both of them will be HOH.
I was thinking the woman can stillbe HOH, claim the house and the other child, then the man can claim the other child and file single still. Am I right?. The woman is making too much money that she can't gey EIC anymore.
As some one who handles a lot of EIC returns I would say if the man claims the EIC for a child he has not claimed before he will be audit for the EIC. I find that most of the time a man claims a child for the first time not a new born this results in an EIC audit.This is based on doing over 1700 EIC returns yearly.
Did the woman pay more than half the upkeep of a home for her qualifying child to be able to claim HOH? You can't just move these things around like trading cards. You have to qualify. Sounds like the man was paying mortgage and property taxes, which could be a big chunk of housing expenses. You really have to step through the requirements for claiming dependents, and for claiming HOH or other filing status, and for claiming EIC on a dependent or nondependent all separately and then for each adult. And, also as the big picture which includes not splitting the child between adults for credits that must stay together and also -- if your clients want -- which includes getting the lowest tax liability for the entire household of two sets of returns. Without a divorce, your options are limited for using one child to qualify two adults for differing credits. Step through the requirements one at a time to discover your options.
>>You can't just move these things around like trading cards.<<
The tax preparer can't, but the taxpayers certainly can. It's a normal aspect of shared housing.
As I read the original post, they both own the house. One partner paid the mortgage and property taxes, while the other covered food and utilities, with what the family basically considers joint funds anyway.
The next year, income dropped into EIC territory, so the support roles had to be reversed. Not their choice, actually.
I don't see anything to question about that beyond the normal things like the organizer and W-2s. (In the later post taxfreak explained that clients had asked to both claim HoH, but that was quickly and correctly resolved.)
This family is hurting and doesn't need more hassles from their own tax advisor. According to Circular 230, we can accept their explanations at face value since they are consistent and credible.
As to support, there is no support issue as long as kids don't provide over half of there own.
Do the math on HOH, then have them agree on who uses the child, where more than one child they can split. If Mom makes to much money for EIC and provides over half the cost of maintaining the home she can't file HOH if she allows man to claim EIC for all children.
In this case neither could file HOH, and none of the children could be on her tax return due to the all or none rules
In the normal way. Not married, paying the majority of costs for the upkeep of her own home that was also the main home for a qualifying child not claimed by the other parent.
Has taxfreak mentioned ANYTHING that conflicts with this scenario, or with the change suggested by the clients for the next year?
Since they bought the house, they agreed that the man take the house, the woman take the 2 kids and her parents living with them. they usually have almost the same amount of income before (the woamn a little higher). the woman is HOH, the man is single. Now due to unemployment of the man and found another job w/c doesnt pay the way he had before, they were thinking of switching the deductions since the woman is making more than the man. the man will take their child as a dependent and the woman continue to have her parents ans her other child.
Yes I did told them that there will be a chance of IRS auditing due to EIC. they are scared to that so I told them I willl reseach more.
I did went to the website of IRS answering all the quistion of eligibility on EIC. taking into consideration that he will file single, and he passed he can take the credits. My main concerned is the all of a sudden changing cards as you have said. I dont want them not to have peace of mind just to get this credits. their situation right now is pretty rough, they want to make sure they followed rules it doesnt matter if no credit at all. I just want them to be happy and give the most refund they are eligble.
I wasn't talking about support of the child. I was asking if the woman paid more than half the house expenses for herself and a qualifying child when the man pays the mortgage and property taxes. In my neck of the woods, that's tens of thousands of dollars, so hard for the other person to pay 51% and qualify for HOH.
They share everything, they have a joint bank account, whatever joint money in the account it pays bills that they have to pay. its hard for them to know which one is paying more, so thats why they decided that one of them will take the house and the onther one take the kids and be head of household. for 2010 the woman is making waymore than the man. Guys my only concern here from the very beginning is about the switching. I just need second opinion if the man will not get IRS letter if he will take the other child. The woman will defenitely claiming the house this yr, but since the other child is a biological child of the man she is willing to give up the dependency for that child. I just need a second opinion. Dont be harsh. thats the only question they have otherwise, the woman will claim everything, and one more thing they dont want to claim half half on the house even if they own together, its one or the other.
THEY WANT ASSURANCE THAT THEY DONT GET LETTER FROM THE IRS. and that is something I cant reassure if i'll let the man take the child.
Of course you can not guarantee that. Tax returns are always subject to review as a normal and important part of our system, and the IRS particularly watches EIC claims.
So what? If he receives a letter, he will just give it to you and you will fax your Preparer's Checklist Form 8867 to IRS and everyone will move on to the next thing.
One thing you CAN guarantee is that under Section 152 of the Internal Revenue Code, he IS eligible to claim EIC.
RE: he is eligible to claim EIC -
11/7/09
at 11:55 AM
If he has an EIC audit He will have to send a copy of the birth certificate, social security card of child.Plus medical or school records to prove she leaves where she does.If you have never seen the letter from IRS for the audits it is about 10 pages.Unfortunately we have about 20 of these a year.
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