Itsy
Member
- Joined
- Dec 14, 2009
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- 608
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I had posted about this somewhere else a few months ago, but will try to clear up what's been posted above.
#1 - Casey would not have been eligible for either the EIC (earned income credit) or the $1000 child tax credit (for children under age 17) if she had zero income. Yes, she could have lied (ha!) and filled out a Schedule C claiming she made money cleaning or babysitting and received both after paying self-employment taxes, BUT...
#2 - The IRS rules have been changed for quite some time now regarding situations like the A's where an adult child and her/his child(ren) live with their parents. IRS rules now state that which ever taxpayer makes the most money *must* claim the grandchild(ren) in order to minimize the EIC (if any) & child tax credit, along with the additional tax credit (another credit available to taxpayers depending on income & number of children claimed) due to the household, as obviously they contribute more support than the lesser earning person(s), and this saves the IRS tons of money. C&G could also claim Casey if she made under the maximum income (varies each year based on the amount one gets for claiming oneself as "single"), and Casey would still get back all of federal income tax withheld.
#3 - Yes, C&G can go back three years & amend their tax returns to claim Caylee if Casey didn't claim her. And even if Casey filed false tax returns for 2007 & 2008, C&G could still amend and Casey would have to repay whatever benefit she received. I kinda doubt they'd do that to her, though, lol. Don't want Casey getting into even more trouble!
#1 - Casey would not have been eligible for either the EIC (earned income credit) or the $1000 child tax credit (for children under age 17) if she had zero income. Yes, she could have lied (ha!) and filled out a Schedule C claiming she made money cleaning or babysitting and received both after paying self-employment taxes, BUT...
#2 - The IRS rules have been changed for quite some time now regarding situations like the A's where an adult child and her/his child(ren) live with their parents. IRS rules now state that which ever taxpayer makes the most money *must* claim the grandchild(ren) in order to minimize the EIC (if any) & child tax credit, along with the additional tax credit (another credit available to taxpayers depending on income & number of children claimed) due to the household, as obviously they contribute more support than the lesser earning person(s), and this saves the IRS tons of money. C&G could also claim Casey if she made under the maximum income (varies each year based on the amount one gets for claiming oneself as "single"), and Casey would still get back all of federal income tax withheld.
#3 - Yes, C&G can go back three years & amend their tax returns to claim Caylee if Casey didn't claim her. And even if Casey filed false tax returns for 2007 & 2008, C&G could still amend and Casey would have to repay whatever benefit she received. I kinda doubt they'd do that to her, though, lol. Don't want Casey getting into even more trouble!