Volunteer Income Tax Assistance (VITA) Certification Practice Test

Is it allowable for both Jim and Sally to each claim one qualifying child for the earned income credit on their individual returns?

1. True

2. False

The correct answer is: False

In the context of the Earned Income Credit (EIC), only one taxpayer can claim a specific qualifying child for the credit in any given tax year. Therefore, it is not permissible for both Jim and Sally to claim the same qualifying child on their individual returns. The IRS rules specify that to qualify for the EIC, a taxpayer must have earned income and a qualifying child who meets the necessary relationship, age, residency, and joint return tests. If both Jim and Sally are eligible but claim the same child, one of them would be disallowed the credit because the child can only be used to claim the credit by one taxpayer. In situations involving multiple taxpayers, it is essential for them to coordinate who will claim the child to avoid conflicts and potential audits. Only one person can benefit from the EIC for that child, which maintains fairness in the application of tax benefits.