Applying Tiebreaker Rules to the Earned Income Tax Credit

If a person is a qualifying child for two or more persons and more than one of the persons claims the child, the IRS applies the tiebreaker rules to determine who should be allowed to claim the child.

You can claim the earned income tax credit (EITC) if you have one or more qualifying children but you can also claim the EITC if you don’t have a qualifying child. If you claim the EITC, you need to meet basic rules plus you need to have a qualifying child or meet the additional rules for those without a qualifying child. These rule for claiming the EITC without a qualifying child are:

 

  • You resided in the United States for more than half of the year; AND
  • You cannot be claimed as a dependent or qualifying child on anyone else's return; AND
  • You must have been at least 25 but under 65 years old at the end of the tax year.

 

IRS changed its position on who can claim the EITC through proposed regulations. 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. This affects all open tax years.


We want to alert everyone who is now eligible ideally before the person files a return. But, for those who already filed and are eligible using the new rule, they can amend their returns for all open tax years if they qualified for that tax year. The open years are tax years 2016, 2015, 2014 and 2013. You must file an amended return by April 15, 2017 to claim a refund for tax year 2013. See our “Claiming EITC for Prior Tax Years" for information on amending a return.

Basically, if the same qualifying child qualifies two persons for the EITC using that child and the two persons aren’t married to each other and neither is a dependent of the other, the person not claiming EITC with the qualifying child may become an eligible individual for claiming the EITC without a qualifying child. The person can claim the EITC without a qualifying child if they meet the rules given above.

Examples

For all the examples given below:

  • the taxpayers file using the calendar year
  • the child meets all qualifying child requirements for the persons in the example
  • all ages given are for the last day of the tax year
  • everyone listed in the example has a Social Security number that is valid for claiming the EITC
  • all of the persons listed are U.S. Citizens and lived in the United States during the full  tax year

 

Example A

A grandparent, parent and child share the same main home for the complete tax year. The qualifying child meets the requirements for both the grandparent and child and no other person qualifies. Both the parent and grandparent provide more than half their own support and can’t be claimed as the dependent of the other. The grandparent is 58 years old and has wages of $12,380 and no other income. The parent is 26 years old and has wages of $11,260 and no other income. The parent claims the EITC with the child as a qualifying child. And, the grandparent can claim the EITC for those with no qualifying child.

Example B

A grandparent, parent and child share the same main home for the complete tax year. The qualifying child meets the requirements for both the grandparent and child and no other person qualifies. Both the parent and grandparent provide more than half their own support and can’t be claimed as the dependent of the other. The grandparent is 58 years old and has wages of $17,650 and no other income. The parent is 26 years old and has wages of $9,260 and no other income. The grandparent claims the EITC with the child as a qualifying child. The parent can claim the EITC for those with no qualifying child.

Example C

A grandparent, parent and child share the same main home for the complete tax year. The qualifying child meets the requirements for both the grandparent and child and no other person qualifies. Both the parent and grandparent provide more than half their own support and can’t be claimed as the dependent of the other. The grandparent is 58 years old and has wages of $17,650 and no other income. The parent is 24 years old and a full time student with wages of $5,260 and no other income. The grandparent claims the EITC with the child as a qualifying child. The parent can’t claim the EITC for those with no qualifying child because the parent is under the age of 25.

Example D

A grandparent, parent and child share the same main home for the complete tax year. The qualifying child meets the requirements for both the grandparent and child and no other person qualifies. The grandparent provides more than half the support for both the parent and the child the grandparent is 58 years old and has wages of $17,650 and no other income. The parent is 27 years old and her doctor certified she is totally and permanently disabled during the tax year. The grandparent claims the EITC with the child as a qualifying child. The parent can’t claim the EITC for those with no qualifying child she is a qualifying child and dependent for the grandparent.

Example E

A grandparent, parent and two children share the same main home for the complete tax year. The qualifying children meet the requirements for both the grandparent and child and no other person qualifies. Both the parent and grandparent provide more than half their own support and can’t be claimed as the dependent of the other. The grandparent is 58 years old and has wages of $17,650 and no other income. The parent is 27 years old with wages of $5,260 and no other income. The grandparent claims the EITC with one child as a qualifying child. The parent claims the EITC with the other child.

Example F

Two sisters live in the same home for more than half the year with the younger sister’s child. Each provides their own support. No other person lived with the child for more than half the year. The older sister has wages of $25,830 with no other income and the younger sister has wages of $9,850 and no other income. The older sister claims the EITC with the qualifying child and the younger sister claims the EITC without a qualifying child.