I make over 400K how can I benefit from the earned income credit?

If you have a working relative in your household, they might be able to claim you child and benefit from the dependent exemption, earned income credit, and child tax credit.  Here is an example below.


Adam and his wife Dorothy live with their 16-year-old daughter Ann and their 23-year-old son
John in the family house. Adam and Dorothy have AGI in excess of $400,000. Ann is in high
school and does not provide more than 50% of her own support. John is not a full-time student
and earns $15,000 in wages while living in the family home. Adam and Dorothy file a joint
return and are eligible to claim Ann as a qualifying child, but would receive little benefit from
claiming a dependency exemption deduction for her because their AGI is above the phase-out
level.


John can claim Ann as his qualifying child on his return if Adam and Dorothy elect
not to claim her. Ann meets the tests to be treated as John’s qualifying child. If John claims
his sister as a dependent, he will qualify for the $3,800 personal exemption for her, a $1,000
child tax credit because Ann is under age 17, and approximately $2,700 in refundable
earned income credit (EIC). When considering the income tax savings of the dependency
exemption, having John claim Ann’s dependency exemption has saved the family almost
$4,200 in tax.

The important facts in this case are that the older child (John) claiming the younger child
resides in the same household, and the older child cannot be a qualifying child of the
parents if he or she is going to claim a dependency exemption or earned income credit (EIC)
for the younger sibling (IRC Secs. 32(c)(1)(B) and 152(b)(1)). Thus, this strategy worked
because John was not a full-time student under age 24. Also, the older child must have
earned income in order to claim the EIC and the younger child must be under age 17 for the
$1,000 child tax credit to apply.

I can be reached at 404 645 5378.  I can prepare you return virtually.  You can scan your information and I can send you copy of your return by email.  I only ask for you cost to file up front.  Yes, tax software cost money.