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Anne
Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 1698
Experience:  Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
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Following scenario. Husband & Wife have a daughter who was

Resolved Question:

Following scenario. Husband & Wife have a daughter who was a full-time student in 2012.
Daughter was 23 as of 12/31/2013. She was married but did not live with husband except for about two months in early 2012. Daughter has a child (age 2 years). Parents provided almost all support for daughter and her child in 2012. Both daughter & child lived under parents roof for all 12 months in 2012. Daughter did work two jobs in 2012. At one job, she earned $3,772 and at the other which was the school she attended, she rec'd a W-2 for $6,561 (no medicare or SS tax was taken out). The daughter's husband contributed nothing. No federal tax withheld on either W-2.
What is the best way for the two returns to be filed, who is a qualified dependent and on which return? The grandparents pay for daycare for the grandchild and cover the daughter's school expenses. Let me know if you need any other information.
Submitted: 11 months ago.
Category: Tax
Expert:  Anne replied 11 months ago.

Anne :

Hi

Anne :

Thank you for your question.

Anne :

First, we have to deal with the fact that she is still legally married

Anne :

If she is legally married, then the only way for her to be eligible as a dependent for her parents is if:

Anne :

If your child and his or her spouse file a joint return only to claim a refund of income tax withheld or estimated tax paid.

Anne :

That is from Publication 501

Anne :

Assuming that that is the case (and that will largely depend on the husband's salary), then the parents may claim their daughter AND their grandchild as dependents

Anne :

However, you mentioned that she received a W2 with no Fica or Medicare taken out.......was federal or state tax withheld?

Customer:

No federal or state tax was taken out of the W-2 that had no Medicare or SS wages or deductions listed. On the other W-2, no federal w/h and only $8.00 state tax w/h. Daughter's husband did not work (as far as we know) in 2012 and was thrown out of the parents house because he did not look

Customer:

for a job

Anne :

Are you sure that this is a W2 and not a 1099MISC?

Anne :

How did she earn the money for that job?

Customer:

Staring right at her document from her school and it is a W-2. Must have been for work study. He 1099-T was for more than $20,000 in fees, tuition, etc. and she got about $4,000 in scholarship on the 1099-T I will have to check about the type of work, but it can't be much, since the Grandfather

Customer:

was classifying it as minimum wage

Anne :

Ok, that helped. Thank you for checking that

Customer:

On the W-2 from hr school, they tool out .23 for state

Anne :

Do her parents have the right to claim her? yes, and no

Customer:

hr should be her

Anne :

If her husband files MFJ, and she is also filed on her parent's tax return as a dependent, then there will be an IRS letter sent to both parties

Customer:

Don't know if the husband filed a return. Not many people are speaking to him. I think he is essentially homeless

Anne :

Then my advice would be to have her parents file her and her child as their dependent, and if for some strange reason he does file MFJ, it will kick back showing her SS# XXXXX used on a previously filed return

Customer:

I agree with the yes and no. Common sense would dictate that the grandparents benefit, but our tax code often operates in a logic-free zone!

Anne :

You must have talked to the boys on Capital Hill too..........they no longer take my phone calls...........

Customer:

Won't she need to file separately, as a student and as the dependent of someone else?

Anne :

Yes, she will

Anne :

They will ask for his SS#, so hopefully she has it

Anne :

if not, it will take more time to process is all

Customer:

Her return will be MFS?

Anne :

wait............

Anne :

let me think here for just a second

Customer:

We do have her SS # XXXXX it will appear on both her's and her parents. I think they have the deadbeat dad's SS # XXXXX

Anne :

I need to look something up

Customer:

Why do I feel we need to offer the deadbeat Dad $100 to file MFJ?

Anne :

I know they can claim her if she files jointly only for a refund...........but I need to check the mfs status

Customer:

Good luck there, I went to the IRS website and that's why you and I are talking

Customer:

I don't do that much tax work, but the few I do always seem to be grey.

Anne :

loL

Anne :

OK.................here's what I know for sure

Anne :

if the married couple files ONLY to get a refund, but didn't support themselves, then the grandparents may claim the daughter as a QUALIFYING RELATIVE

Anne :

scratch that I truly meant to type QUALIFYING CHILD

Customer:

Think the $8.00 State will cover us?

Anne :

I can't find anything that states that this can be done if she files separate

Anne :

hold on just a second....I'm trying to figure out the easiest way to answer this

Customer:

I had just the daughter in the computer program and she owed money, but adding the husband would probably be zero tax and again, maybe the $8.00 helps.

Anne :

in order for the grandparents to file her, she MUST file jointly (and if he's a deadbeat and didn't work, then he would have no income)

Customer:

Bet you dollars to donuts that the husband came up with 1099 income and used his child's SS # XXXXX

Anne :

it doesn't matter if she actually GETS the refund....the point is....they would have no tax liability

Anne :

how old is his child?

Anne :

or are you speaking about the grandchild here we've been discussing

Customer:

True, but I'm going to need his signature (pin). and that $100 may be what it takes.

Customer:

The grandchild was only about 2 years old at the end of 2012.

Anne :

at any rate, if he as a 1099MISC for more than $400, then they must file jointly because of the SE tax, and that will mean that the grandparents can't file her

Anne :

she needs to be divorced by 12/31/2013

Anne :

if that's her plan

Anne :

She can challenge him

Anne :

if that's what he did

Customer:

To a duel?

Anne :

lol

Anne :

of sorts

Anne :

first, you need to try having her parents claim her........and the grandchild........and see if they're numbers have been "used" (I hate that expression)

Customer:

So we file the daughter's 2012 return as MFJ and se what happens. I think they still speak and I think she can hit him with a cash inducement.

Anne :

wait

Anne :

BE SURE she claims her daughter

Customer:

Yup: I have been there before with children SS #'s taken by wrong spouse and also preparers sending in fake returns

Anne :

unfortunately, there's ALOT of fraud around the EIC

Anne :

if he used the child on his return................my guess is he would have filed HH and gotten the earned income credit

Anne :

THAT she can challenge

Anne :

I've been in this business 27 years, and just recently I had 2 clients come to me because they're preparer tried to "make a deal with them"

Anne :

I don't even know how to ASK something like thatt

Customer:

So you want her to claim her child on her return and the grandparents can't claim either their daughter or grand-daughter?

Customer:

I believe anything these days

Anne :

depends. on if her joint return (with the child on it) makes it through IRS efile

Anne :

that's no guarantee he won't try later..........but IRS will stop him, and then they have to prove where the child lived, and THAT will be where she challenges him

Customer:

Anne: let me be sure I am on the same wavelength. File the grandparent return first with the daughter and grandchild on that return as dependents

Anne :

no

Customer:

Dang

Anne :

the daughter must file jointly (showing no income for her soon to be ex) and she files her daughter on her return

Anne :

you need to see if he used the daughter

Customer:

So she is showing 3 on a joint return?

Anne :

once that clears (If it does), THEN the parents can claim the daughter.............the granddaughter will be on her mom's return, and she will get an Earned Income Credit for the child....probably in the neighborhood of $1000

Anne :

yes

Anne :

that's the only way to know if he filed as Head of Household (which he's not) and if both claim the child, the IRS will catch it

Customer:

I just have to mark the spot on the program on her return that she can be claimed by someone else on their return

Anne :

Yes..............but you need to give her return time to clear (meaning once she gets her refund)

Anne :

before the grandparents file

Customer:

Can I do MFJ without his permission????

Customer:

Unfortunately he was still alive at the end of 2012

Anne :

if you can't find him..............but it would have to be mailed in

Anne :

I like the way you think...............you've been making me smile...............thank you

Customer:

Stating that the husband could not be found and therefore we could not get him to sign the return

Customer:

Did I mention that the daughter never changed her maiden name?

Anne :

but the marriage is a matter of public record

Anne :

has she ever signed his name for any reason?

Anne :

to cash a check for instance

Customer:

Don't know. Maybe. If she did it once, than she could sign the return for him

Anne :

depends on the laws in your state..............you'd have to check

Anne :

in MI, once you let your spouse sign your name once..........they can do ALL KINDS of things

Customer:

Then why not sign the 8879 for both?

Anne :

open a cc in your name

Anne :

As an EA I can't tell you to do that

Customer:

I always send them out to the parking lot to have the wife or husband, who I know is sitting in the car in 100 degree south carolina heat

Anne :

LOL in MI they're generally too cold to get out of the car...........they stayed where it was warm

Customer:

Okay: Since this has been an amazing journey. can we recap options?

Anne :

sure

Anne :

do you want to go first this time?

Customer:

The daughter could file MFJ or MFS. If she files MFS she has to claim herself and her parents can't claim her

Anne :

so far so good

Customer:

She really should file MFJ

Anne :

keep going

Customer:

She does MFJ and can be claimed by someone else

Customer:

That goes on the return

Anne :

again...........if the only reason she filed jointly was to claim a refund and she did not provide more that 1/2 of her total support

Anne :

but I did make an error

Customer:

She definitely did not provide more than 1/2 her support. Her parents paid for her associates degree and the baby's daycare and everyting else

Anne :

she would NOT be eligible for the EIC since she would be a dependent

Customer:

Right

Anne :

That was my errror

Customer:

So again, she files MFJ with her SS#, the deadbeat husband SS # (and the baby)

Anne :

yes

Customer:

What if the GP's have become the baby's legal guardians?

Anne :

Do you enjoy throwing me curve balls?

Anne :

lol

Anne :

have they?

Customer:

All heck no. I just know I'm going to get hit with that in the morning when I talk to the client

Customer:

Hold for a sec, I have to throw a dog out

Anne :

I generally let mine walk out..............but to each his own.........lol

Anne :

The parent has the superior right to claim the child

Customer:

I'm back

Anne :

If the grandparents had legal custody, wouldn't that involve claiming that both parents were unfit?

Customer:

They told her not to marry the guy and the rest is history

Anne :

that doesn't make her a bad parent though

Anne :

just a poor judge of men

Anne :

I'm afraid she'

Anne :

she's not alone in that boat

Customer:

I Honestly don't know the daughter

Anne :

well, the parents would have to take her to court to get legal custody

Anne :

maybe you should meet her...............sounds like she might be available soon...........lol

Customer:

Anyway. Daughter goes MFJ and has to claim the baby. No EIC or federal Refund

Anne :

and she's going to college................

Anne :

you've got it

Customer:

Yup. No dumb co-eds in college!

Anne :

you DO know that song from

Anne :

"my Fair Lady" is running through my head now

Customer:

Which one?

Anne :

I think she's got it

Anne :

only change the she to a he

Customer:

My George

Customer:

Before I pass out.

Anne :

lol

Anne :

if you need me again..................I'm usually around

Anne :

but are you clear what you need to do tomorow?

Customer:

I hate the idea of mailing the return in. Drake will get me a rejection within 24 hours if one is out there to be had

Anne :

if they both sign the EF form.........(he's in the car.....remember?)

Customer:

My regular email XXXXX@XXXXXX.XXX

Anne :

as long as she has his SS#

Anne :

I'm sorry....they "xx" out everyone's email

Anne :

they don't want us to have contact with anyone outside of this venye

Anne :

venue

Customer:

did not know that

Customer:

No problem

Anne :

they're very protective of that, and I guess I can't blame them

Anne :

are we good then?

Anne :

You have your plan of attack?

Customer:

Anyway, for the sake of argument, She files MFJ and she claims her daughter

Anne :

yes

Customer:

The gp's file with her as a qualifying child but they can;t claim the grandkid

Anne :

correct

Anne :

the IRS will often THINK she qualifies for the EIC and either send it to her, or send her a letter claiming she was eligible

Anne :

until they get the grandparent's return

Anne :

so just be aware of that....and if they send her a check, be sure she doesn't cash it

Customer:

If I efile her return, how long before I efile the GP's. Your opinion

Anne :

as soon as hers makes it through the system..................however, they will have to mail in...because her SS# XXXXX show its already been used

Customer:

Her's being the 22 year old

Anne :

yes

Customer:

Okay, let's stop there (1:15AM) and I will talk to the client in the morning.

Customer:

Thanks for your help

Anne :

yep same time here

Anne :

good luck

Anne :

nice chatting with ou

Anne :

you

Anne :

and thank you for using Justanswer/Pearl

Customer:

You too.

Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 1698
Experience: Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
Anne and 6 other Tax Specialists are ready to help you

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