Can Both Parents Claim EIC for the Same Child?

The Earned Income Credit (EIC) is a vital tax benefit aimed at assisting low to moderate-income families by reducing their tax liability and potentially increasing refunds. It serves as a significant financial resource, particularly during tax season.

Basic Criteria for EIC

To qualify for the EIC, individuals and families must have earned income below specific thresholds, which adjust annually. For the 2024 tax year, a single filer with one qualifying child must earn below $46,560, while a married couple filing jointly with three or more qualifying children must earn less than $63,298. A qualifying child must meet the age, relationship, residency, and joint return tests. The child must be under 19 at the end of the tax year, or under 24 if a full-time student, and must be related to the taxpayer as a son, daughter, stepchild, or eligible foster child. Additionally, the child must have lived with the taxpayer for more than half of the tax year in the United States.

Custodial Parent Status

The IRS defines the custodial parent as the one with whom the child lived for the majority of nights during the tax year. Typically, only the custodial parent can claim the EIC for the child. In situations involving separation or divorce, the non-custodial parent may claim certain tax benefits, such as the child tax credit, if the custodial parent signs Form 8332 or a similar declaration. However, this exception does not extend to the EIC, which remains exclusively available to the custodial parent.

Tie-Breaker Rules

When both parents meet the criteria to claim the EIC for the same child, the IRS applies tie-breaker rules. These rules prioritize the parent with the higher adjusted gross income (AGI) when custody is equally shared. AGI serves as an impartial metric to determine eligibility, simplifying the resolution of disputes and reducing the likelihood of errors, which could prompt IRS audits or penalties.

Consequences of Duplicate Claims

If two parents claim the EIC for the same child, the IRS’s systems can identify duplicate claims, resulting in the rejection of one or both filings and delays in processing. Improper claims may require repayment of the credit with interest. Penalties for negligence can reach 20% of the erroneous claim, while fraudulent claims can lead to more severe consequences, increasing the financial strain on families.