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2. Earned Income Credit
Section 32(a)(1) allows an eligible individual an earned
income credit against the individual’s income tax liability. The
credit is calculated as a percentage of the individual’s earned
income. Sec. 32(a)(1). Section 32(a)(2) and (b) limits the
credit allowed based on whether the eligible individual has no
qualifying children, one qualifying child, or two or more
qualifying children.
Petitioner claimed an earned income credit based on Eric and
Cassandra as qualifying foster children. As relevant herein,
section 32(c)(3)(B)(iii) defines an “eligible foster child” as an
individual who is placed with the taxpayer by an authorized
placement agency; whom the taxpayer cares for as the taxpayer’s
own child; and, who has the same principal place of abode as the
taxpayer for the taxpayer’s entire taxable year.
Neither Eric nor Cassandra was placed with petitioner by an
authorized placement agency. Additionally, the record indicates
that Cassandra did not have the same principal place of abode as
petitioner for petitioner’s entire taxable year. Petitioner is
therefore not entitled to claim earned income credits for the
children.
3. Head of Household Filing Status
Section 1(b) imposes a special tax rate on individuals
filing as head of household. As relevant herein, section 2(b)
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Last modified: May 25, 2011