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The IRS changed its position on who may claim the earned income tax credit (EITC) without a qualifying child in situations in which an individual meets the definition of a qualifying child for more than one taxpayer. Under the new rules, a taxpayer who may not claim an individual as a qualifying child after applying the tie-breaker rules may now claim the EITC without a qualifying child, if all other requirements are met.
The new rule is explained in proposed regulations issued on January 19, 2017. This change affects all open tax years. Thus, for example, you may apply this rule on a 2016 return or an amended return for an earlier year that is open under the statute of limitations. Note that most individuals only have until April 15, 2017 to amend a 2013 tax return to claim a refund.
This new rule may apply in households in which an individual meets the definition of a qualifying child for more than one taxpayer. For example, this new rule may apply in households in which grandparents, children, and grandchildren live together or in households with unmarried parents who both work. For more information and examples, see Applying Tiebreaker Rules to the Earned Income Tax Credit.
We will have further updates on these proposed regulations soon. We are working with software providers, tax return preparers, and other partners to get the word out and to update software and forms and instructions.
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Share this electronic guide for finding EITC information on line. Post it to your web site or email it to help your clients find the information they need to determine if they are eligible for EITC and to file accurate EITC claims. This publication describes a topic briefly and then provides a link to find more information. Download Pub 4935, Guide to Everything Earned Income Tax Credit for Individuals Online here.
Educators (colleges, universities, trade and technical schools), those who prepare the Form 1098-T and tax returns preparer. This webinar "Not Just College Credits; it's Tax Credits Too!" has good information for students, parents and college financial administrators. Learn about education credits and eligibility requirements along with information about the American Opportunity Tax Credits, Form 1098-T and much more.