For unmarried parents, deciding which parent claims the child on their taxes is a common discussion point around the beginning of each year. Some divorce decrees or custody orders include stipulations for which parent can claim the child, but this is not always the case. If you do not have a court-ordered agreement, determining who qualifies for the earned income tax credit is crucial to ensure compliance with federal law.
Qualifying Factors for the Earned Income Credit
While certain situations may entitle a taxpayer to the earned income tax credit without claiming a child, the more common qualifying route is by claiming a qualifying child. To qualify for the earned income tax credit, you must have earned income and had a qualifying child who lived with you for over half of the year. There are income limits based on the number of dependents you claim, so high-earning individuals will not qualify.
Turner v. Commissioner
The case of Turner v. Commissioner of Internal Revenue was heard in the United States Tax Court in 2024 and dealt with the earned income credit and head of household filing status. Turner was the court-appointed guardian of her grandchild and had been for 13 years. In 2020, the grandchild was unemployed, and Turner helped pay for their rent, clothing, food, and other expenses. The grandchild lived with a friend for most of the year, spending approximately two months living with Turner in 2020.
When filing taxes for the 2020 tax year, Turner claimed her grandchild as a dependent in order to receive the earned income credit, and she filed as head of household. However, Turner did not qualify for the earned income credit, nor did she meet the requirements for filing as head of household.
Unmarried individuals qualify as a head of household if they maintain the primary home for a qualifying child or other dependent. Because Turner’s home was not the primary residence of her grandchild for more than half the year in 2020, and she had no other dependents to claim, she could not be considered head of household for tax purposes.
IRS Rules
The full IRS requirements for filing as head of household are as follows:
- You are unmarried or were considered unmarried on the last day of the year
- You paid more than 50% of the costs of maintaining your home
- A qualifying dependent lived with you for more than half the year
There is some leniency in the third requirement for cohabitation, such as for college students who are away at school or dependent parents.
If you have joint custody of your child with their other parent, the question of who is claiming the earned income credit may arise each year during tax season. Keep in mind that if parents alternate who claims the earned income tax credit each year, the custody schedule must also alternate each year to ensure the child lives with the parent claiming the credit for more than half the year.