The rules for claiming the earned income tax credit are complicated and everchanging, and it’s easy for tax pros to make mistakes when preparing the return.
Taxpayers who know they qualify for the credit are often afraid to claim it themselves, so they turn to you for help. However, due to the complexity of the credit, a significant number of taxpayers claiming the credit either have the credit amount reduced or are denied the credit entirely.
Below, you’ll find a few of the top questions from a recent webinar on the topic and their accompanying answers. If you choose to attend the on-demand version of this webinar, you’ll have access to the full recording and the entire list of Q&As.
Q: Is a foster child under age 18 a qualifying child for purposes of the earned income credit?
A: Yes, they can be. For this credit, a person is considered your foster child if the child is placed with you by an authorized placement agency or by judgment, decree or other order of any court of competent jurisdiction. For more information, see Publication 596, Earned Income Credit (EIC).
Q: Is it correct that “childless taxpayers” have an age limit of over 25 and under 65, but there isn’t an age limit for taxpayers with children?
A: That’s correct because the age limit is on the child, not the parents.
Q: In cases where a legal decree of separation has been granted, would the taxpayer still file as MFS, or would Single rules apply?
A: Each state determines which document terminates a marriage. In some states a legal separation does; in others, it takes a divorce decree to terminate the marriage. A married taxpayer cannot file as Single until their marriage is considered dissolved under local law.
Q: Do we need to get the Social Security card?
A: Yes, the taxpayers need a SSN for the child. The Social Security card will verify they are using the correct name and SSN for the dependent.
To learn more about tax reporting for the earned income tax credit, you can watch our on-demand webinar. NATP members can attend for free, depending on membership level! If you’re not an NATP member and want to learn more, join our completely free 30-day trial at natptax.com/explore.
About National Association of Tax ProfessionalsThe National Association of Tax Professionals (NATP) is the largest association dedicated to equipping tax professionals with the resources, connections and education they need to provide the highest level of service to their clients. NATP is comprised of over 23,000 leading tax professionals who believe in a superior standard of ethics and exemplify professional excellence. Members rely on NATP to deliver professional connections, content expertise and advocacy that provides them with the support they need to best serve their clients. The organization welcomes all tax professionals in their quest to continually meet the needs of the public, no matter where they are in their careers.
The NATP headquarters is located in Appleton, WI. To learn more, visit www.natptax.com.
Information included in this article is accurate as of the publish date. This post is not reflective of tax law changes or IRS guidance that may have occurred after the date of publishing. All taxpayer circumstances are different, and NATP recommends contacting research services if you have specific questions about your clients’ tax situations.