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Posted by Arthur Kamlet on December 18, 2007, 4:49 pm
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>A must read for all is IRS Notice 2008-05
>(http://www.irs.gov/pub/irs-drop/n-08-05.pdf).
>
>It basically makes a change on who is a qualifying child of
>another taxpayer. A taxpayer can not claim a person as a
>qualifying relative if the person is a qualifying child of
>another taxpayer. The definition of taxpayer was quite broad and
>included anyone subject to US tax law. This had the effect of
>denying dependency exemptions to individuals who completely cared
>for children who failed the qualifying relative test because they
>were the qualifying children of their parent even if the parent
>did not file a tax return. It also eliminated the dependency
>exemption for those who cared for unrelated children who were
>siblings as they were a qualifying child of each other.
I agree this goes a long way to resolving that issue, and I'm
glad to see it.
It does not help in the two sibling case where, let's say, each
sibling has capital gains income from sale of stock of, say, $950.
Since each sibling must file a tax return to pay tax, we are
back where we started. Even worse, we know we cannot go the
Qual Relative route.
>This notice fixes that by allowing one to treat those children as
>qualifying relatives (assumes all the other QR tests are met) as
>long as the parent or anyone with respect to whom the child is
>defined as a qualifying child, is not required to file a tax
>return and does not file an income tax return or merely files to
>obtain a refund of taxes withheld. The notice has examples.
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
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