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earned income credit

Forum|Forum|3 years ago
February 5, 2023
3 replies
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I have unmarried clients that live together. They have 2 children. One client made $61,000 and the other made $11,000. I have always done the taxes for the higher income client and have always claimed the 2 children on that return. This is the first time filing for the lower income client. Can I have each parent claim a child on their tax returns? This way they can each file head of household and the lower income parent can claim earned income credit. Or since the income is so low would they not pass the support test. Thank you.

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Best answer by garman22

@bob808 wrote:
But if the higher income taxpayer claim claim head of household and the lower income taxpayer can claim both dependents

That is not allowed. Most likely, these are your options (assuming both parents agree):

Option #1: Parent 1 claims Head of Household and two dependents. Parent 2 claims Single with no dependents.

Option #2: Parent 1 claims Head of Household and one dependent. Parent 2 claims Single with one dependent.

Option #3: Parent 1 claims Single and no dependents. Parent 2 claims Single with two dependents.

@TaxGuyBill wrote:

@bob808 wrote:
But if the higher income taxpayer claim claim head of household and the lower income taxpayer can claim both dependents

That is not allowed. Most likely, these are your options (assuming both parents agree):

Option #1: Parent 1 claims Head of Household and two dependents. Parent 2 claims Single with no dependents.

Option #2: Parent 1 claims Head of Household and one dependent. Parent 2 claims Single with one dependent.

Option #3: Parent 1 claims Single and no dependents. Parent 2 claims Single with two dependents.

I agree w/ @TaxGuyBill . Run your scenarios on the 3 and see which makes sense. I wonder how much higher loses if lower claims both kids with the EIC. 11k (i think thats what you showed) is damn near the top end of earned income credit. But.......run em.

BobKamman

Level 15

And what support test would that be? Who is paying more than half the household expenses? It's possible to have more than one household under one roof, but I haven't seen it work in a situation like this, where both kids belong to both parents.

The low-income non-spouse doesn't need a dependent to reduce taxable income to zero, but may benefit from claiming one or both kids for EIC. Doesn't need HH for that.

B

bob808Author

Level 3

The house & mortgage is in the higher income parent's name. They are paying the majority of the expenses. I thought you needed to show majority support for head of household. But if the higher income taxpayer claim claim head of household and the lower income taxpayer can claim both dependents that would increase the refund of the lower income taxpayer by $5,400 and the higher income taxpayer would lose the $2,500 child tax credit. Thanks

T

TaxGuyBill

Level 15

@bob808 wrote:
But if the higher income taxpayer claim claim head of household and the lower income taxpayer can claim both dependents

That is not allowed. Most likely, these are your options (assuming both parents agree):

Option #1: Parent 1 claims Head of Household and two dependents. Parent 2 claims Single with no dependents.

Option #2: Parent 1 claims Head of Household and one dependent. Parent 2 claims Single with one dependent.

Option #3: Parent 1 claims Single and no dependents. Parent 2 claims Single with two dependents.

Accountant-Man

Level 13

Assuming the $61k earner pays more than half of the cost of the home, how does the $11k earner ALSO pay more than half of the costs?

Only one can be HOH.

** I'm still a champion... of the world! Even without The Lounge.

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bob808Author

Level 3

I did only file the $61 earner as HOH with one child and the $11k earner as single with one child.

G

garman22

Intuit Community Champion

@bob808 That was your best scenario?

Did the $61 earner lose too much to allow the lower to claim both? I thought it might be close.

T

taxes96786

Level 8

How old is the client with 11K income? May qualify for EIC by age if not claiming the children.

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