Question

Stan would like to claim his grandson, Spencer, as his qualifying child so he can claim the Earned Income Credit (EIC). However, Spencer's mother,Alma, is also eligible to claim Spencer as her qualifying child for EIC purposes. As Stan's tax preparer, what information would you share with Stan?There is only one right answer.

O Alma holds a higher right and may claim the EIC based on Spencer, Because Alma is Spencer's parent.
O As long as Stan files before Alma, he may claim EIC based on Spencer, his qualifying child.
O Stan and Alma may agree to each claim one-half of the EIC based on Spencer, their qualifying child.
O Stan may claimEIC based on Spencer if his adjusted gross income is higher than Alma's.

Answer 1

Only Spencer's mother Alma has the higher right to claim the EIC for Spencer unless she chooses not to claim him, in which case Stan could possibly claim Spencer for EIC purposes.

Step-by-step explanation:

Stan would like to claim his grandson, Spencer, as his qualifying child for the Earned Income Credit (EIC). The right to claim a dependent for the purposes of the EIC goes to the child's parent unless the parent is not claiming the child as a dependent. Therefore, Alma, as Spencer's mother, holds the higher right and may claim the EIC based on Spencer. It is not correct that Stan and Alma can split the credit for EIC, nor can the EIC be claimed based solely on who files first or whose adjusted gross income is higher. Stan may only claim EIC based on Spencer if Alma chooses not to claim Spencer for the tax year in question.