children and tax credits/dependents

What is the name of your state? CA

I have several questions. I'd appreciate any light you could shed.

1. Tax Terms
What are child tax credit, earned income credit and dependent credits. Our tax preparers are volunteers, so they either can't explain what's what or are pretty much burned out trying to prepare returns. I get the feeling that dependents can be claimed regardless of age/relationship as long as the person wanting to claim the dependent provided more than 50% support and lived with the dependent(s) the majority of the year. Where does child care expense fall?

2. Falsely claiming children
What happens when a relative claims a child as a dependent and for earned income credit knowing that the child lived with the custodial parent in another time zone for the tax year and was supported by that parent 100%? After the paper return is sent in with the statement showing the reason the parent's return was rejected, what happens? What is the average time for the corrected amount to be paid to the parent? What consequences does the relative face?

3. 2005 Tax year
If the child is sent to live with a grandparent while the custodial parent is serving duty overseas, can the custodial parent (cp) receive any child tax benefits? The non-custodial parent (ncp) barely has anything to do with the child. Does the grandparent or ncp have to receive permission from the cp to file for anything?

1) You can find the definitions of terms at the IRS website, www.irs.gov. They have a fairly decent search engine.

There is no such thing as a dependent credit, it's called a dependency exemption. Yes, GENERALLY you can claim someone as a dependent if you provided over 50% of their support, they lived with you for the entire year, and their Gross Income was less than the amount of the dependency exemption, which for this year is $3100. Naturally there are numerous provisos and exceptions to this rule, so be careful.

2) Anyone who fraudulently claims an exemption and EIC will be burned at the stake. Just kidding. The IRS will eventually catch up with them and want the money back, along with penalties and interest. As for how long that will take, your guess is as good as mine. They will also be forbidden to claim the EIC for the ensuing TEN years.

Once the paper return is sent in, you can expect it to take a minimum of two to three months or more for the IRS to sort it out and sent the money to the rightful recipient.

3) This is a tricky question. The Grandparents and the CP should work out who will be claiming the kids. If the CP is providing support, the exemption still belongs to the CP. Yes, the CP will have to give permission for the grandparents or the NCP to claim the kids. My guess is that the CP will not need the exemption, due to the majority of wages being combat excluded, unless of course, the CP is not serving in a Combat Zone.

Snipes

Thank you for your reply.

Your response is greatly appreciated.