Question

Grace is your best friend's 20-year-old daughter. Grace has a one-year-old child. You know that Grace lived at home and was a full-time student until she quit college at the end of September of the tax year. Your friend (Grace's mom) gives you Grace's tax documents and tells you to let Grace claim herself and claim her child for EITC. To meet the EITC due diligence knowledge requirement, you:

Cannot ignore the facts about Grace living with her mother for nine months of the year when she was a full-time student.

Can disregard information obtained through a personal relationship.

Cannot complete Grace's return under any circumstances.

Can complete Grace's return filing her as a single nondependent, with EITC for her child.

Answer 1

Answer:-

Can complete Grace's return filing her as a single non dependent with Earned Income Tax credit(EITC) for her child.

To be eligible following conditions have to be satisfied.

-The child should have a valid social security number

- Grace should be the only person claiming this child

- Grace's child should pass the following 4 tests

a) Residency test - The child should have lived with Grace for more than half of the year in united states.

b) Age test - The child should be less than 19 or 24 if a full time student.

c) Joint Return test - Grace;s child should not have filed a joint return

d) Relationship test - The child should be daughter, son, adopted child, step child etc

Since Grace has one child her adjusted gross income and earned income for the year should be less than $ 40320

If all above conditions are satisfied then we can complete Grace's return filing her as a single non dependent with Earned Income Tax credit(EITC) for her child.