Case Study 2: Tests for Qualifying Children

Robyn Smith is 25 years old. She and her 2-year-old child, Aiden, lived with Robyn's mother all year. Aiden has a valid SSN.

Following are Robyn's responses to the questions in the EIC with a Qualifying Child Chart in the Volunteer Resource Guide, Tab I, Earned Income Credit:

Step 1: Does your qualifying child have an SSN that allows him or her to work? (YES)
Step 2: Is this your child, stepchild, adopted child, or eligible foster child, sibling, half sibling, stepsibling, or a descendant of any of them? (YES)
Step 3: Was the child any of the following at the end of the tax year: Under age 19, or under age 24 and a full-time student, or any age and permanently and totally disabled? (YES)
Step 4: Did the child file a joint return for the year? (NO)
Step 5: Did the child live with you in the United States for more than half (183 days) of the tax year? (YES)
Step 6: Is the child a qualifying child of another person? (Robyn replies that she does not know)

What does the tax preparer do next to determine if Aiden is a qualifying child for EIC?

Click here for an explanation.

Because the taxpayer, Robyn, does not know the answer to Step 6, "Is the child a qualifying child of another person?", the tax preparer must ask probing questions to clarify the child's status. For example, if you ask who else lived in the house that is related to Aiden, Robyn would tell you that her mother also lives with them.

The tax preparer then needs to go through the steps to see if Aiden can be a qualifying child for Robyn's mother and then review the Qualifying Child of More than One Person rules.

EIC with a Qualifying Child Chart from Publication 4012.

Earned Income Credit (EIC) Workout

Rules for Taxpayers with Qualifying Children

Case Study 2: Tests for Qualifying Children