Living Together Tax Issues

2.2 Filing Requirements/Status/Dependents/Exemptions: Filing Status

If the parents of a 2-year child never married but live together with the child for the tax year, and both contribute to the cost of maintaining the household for the child and themselves, may they both file as head of household?

Only one taxpayer may claim the child as a qualifying child for purposes of filing as head of household. Also, a taxpayer filing as head of household must furnish over half the cost of maintaining the household. Therefore, both parents may not file as head of household.

2.3 Filing Requirements/Status/Dependents/Exemptions: Dependents & Exemptions

My husband and I have provided a home for my niece and her son for the past seven months. She receives no child support from her ex-spouse, and she does not work or have any income of her own. Can I claim her and her son as dependents?

Under a new law effective with tax years beginning after December 31, 2004, your niece and her son would qualify as your dependents as your qualifying children if your niece and her son--

• Are the children or grandchildren of your brother or sister,
• Have not attained the age of 19 (or 24, in the case of full-time students) by the close of the calendar year in which your taxable year begins,
• Had the same principal place of abode as you for more than 1/2 of your taxable year, and
• Have not provided 1/2 of their own support during the calendar year in which your taxable year begins.

8.3 Earned Income Tax Credit: Other EITC Issues

If both parents want to claim the earned income credit, who is entitled to it if there was no marriage?

If the child is a qualifying child of both parents, they may choose which one will claim the credit. If there are two qualifying children, each parent may claim the credit on the basis of one of the children or one parent may claim the credit with both children. If both actually claim the credit on the basis of the same child or children, the parent who is entitled to the credit is the parent with whom the child lived for the longest period of time during the tax year, or the parent with the higher adjusted gross income (AGI) if the child lived with each parent for the same amount of time during the year.