A Multiple Support Agreement is an agreement between two or more people who agree to be considered as a single economic unit for the purpose of claiming certain tax benefits. Under a Multiple Support Agreement, each person agrees to provide a certain level of financial support to the other person or persons in the agreement. The agreement must be in writing and must be signed by all parties to the agreement.
What is the purpose of a multiple support agreement? The purpose of a multiple support agreement is to allow two or more taxpayers to agree to be considered as a single household for purposes of the earned income tax credit (EITC).
In order for an EITC claim to be valid, the taxpayer must have a qualifying child. A qualifying child is a son, daughter, stepchild, or foster child who meets certain relationship, age, and residency requirements. A taxpayer can only claim one qualifying child per year.
If a taxpayer has more than one child, they can choose which child to designate as the qualifying child. However, if the taxpayer has more than one child and cannot agree on which child to designate as the qualifying child, the IRS will consider all of the children to be qualifying children.
In order to be considered as a single household for purposes of the EITC, two or more taxpayers must sign a multiple support agreement. The agreement must be signed by all of the taxpayers who wish to be considered as a single household, and it must be filed with the IRS.
The agreement must designate one of the taxpayers as the primary taxpayer, and it must state that the other taxpayers agree to be considered as part of the primary taxpayer's household. The agreement must also state that the taxpayers agree to be liable for any taxes, interest, or penalties that may be owed as a result of the EITC claim.
The purpose of the multiple support agreement is to allow taxpayers who have more than one child to choose which child to designate as the qualifying child, and to be considered as a single household for purposes of the EITC. Can I claim my 40 year old son as a dependent? No, you cannot claim your 40 year old son as a dependent. The IRS defines a dependent as a child who is under the age of 19, or a child who is under the age of 24 and a full-time student.
What can be claimed if taxpayer provides more than half their support? If a taxpayer provides more than half of their own support, they may be able to claim the Head of Household filing status. This status can lead to a lower tax rate and a larger standard deduction. To claim the Head of Household status, the taxpayer must meet certain requirements, including:
- being unmarried or "considered unmarried" on the last day of the tax year
- paying more than half the cost of maintaining a home for themselves and any qualifying person
A qualifying person is typically a dependent child, but may also include a disabled parent or grandparent, among others. Can two people claim the same dependent? Two people can claim the same dependent if they are both the parent or guardian of the dependent, or if they are both married to each other and filing a joint return. Do I need to file Form 2120? You only need to file Form 2120 if you are a corporation or partnership that is required to file a tax return, and you are allocating income or loss among yourselves.