T.C. Summary Opinion 2003-133
UNITED STATES TAX COURT
HARVEY TAYLOR, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 4818-01S. Filed September 25, 2003.
Harvey Taylor, pro se.
Matthew J. Bailie, for respondent.
GOLDBERG, Special Trial Judge: This case was heard pursuant
to the provisions of section 7463 of the Internal Revenue Code in
effect at the time the petition was filed. The decision to be
entered is not reviewable by any other court, and this opinion
should not be cited as authority. Unless otherwise indicated,
subsequent section references are to the Internal Revenue Code in
effect for the year in issue.
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Respondent determined a deficiency in petitioner’s Federal
income tax of $4,026 for the taxable year 1997.
The issues for decision are: (1) Whether petitioner is
entitled to four dependency exemption deductions; (2) whether
petitioner is entitled to head of household filing status; and
(3) whether petitioner is entitled to an earned income credit.
Some of the facts have been stipulated and are so found.
The stipulations of fact and the attached exhibits are
incorporated herein by this reference. Petitioner resided in
Fresno, California, on the date the petition was filed in this
case.
Petitioner has four children: Tristan Taylor, Harvey
Taylor, Khyrie Taylor, and Kares Taylor. Petitioner and the
children’s mother, Angela White (Ms. White), have never been
married to each other. During the year in issue, Ms. White had
physical custody of the children, and her residence was the
children’s principal place of abode.
During the year in issue, petitioner earned $18,546 in
taxable wages. He resided with his brother in a two-bedroom
apartment. Child support payments were deducted from his
paycheck every 2 weeks; petitioner estimates the amount of these
payments to have been $291. In addition to the child support,
petitioner bought presents for the children on birthdays and
holidays, and the children were covered by petitioner’s dental
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insurance plan. However, petitioner did not directly pay any
other expenses for the children on a routine basis.
During the year in issue, Ms. White lived in a three-bedroom
apartment with the four children. She was employed part time as
an assisted living care provider, and she received approximately
$1,500 per month in welfare and Social Security income. The
children were covered by a State medical insurance program. Ms.
White estimated her monthly expenses during that year to be as
follows: $575 for rent, $100 for utilities, $40 for life
insurance, $45 for telephone service, $300 for food, and $280 for
a car payment and car insurance. Because two of petitioner’s and
Ms. White’s children are developmentally disabled, Ms. White must
incur additional expenses.
The first issue for decision is whether petitioner is
entitled to four dependency exemption deductions. Petitioner
claimed dependency exemption deductions for Tristan, Harvey,
Khyrie, and Kares. Respondent disallowed each of these
deductions.
Among other requirements, a taxpayer generally is entitled
to a dependency exemption deduction for a child only if the
taxpayer provides over half of the child’s total support during
the taxable year. Secs. 151(a), (c) and 152(a). The total
support for a child includes the entire amount of support which
the child receives from all sources, including Social Security
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benefits and welfare payments paid for the child’s benefit.
Lutter v. Commissioner, 61 T.C. 685 (1974), affd. per curiam 514
F.2d 1095 (7th Cir. 1975); sec. 1.152-1(a)(2)(i), Income Tax
Regs.
Petitioner was unable to provide estimates concerning the
portion of the children’s expenses which he paid during 1997.
Petitioner did testify, however, that he paid $291 in child
support every 2 weeks.1 This would equal approximately $7,566 in
1 year. Ms. White, on the other hand, testified that she
received between $583 and $1,200 in monthly wages,2 in addition
to the $1,500 per month in welfare and Social Security payments.
Disregarding the uncertain amount of wage income, Ms. White still
received approximately $18,000 in 1 year from welfare and Social
Security. Thus, even if we accept petitioner’s estimate of the
amount of his child support payments, the children nevertheless
received a significantly greater amount of support from sources
other than petitioner. Furthermore, petitioner admitted that he
did not make routine payments for expenses in excess of the child
support payments. On the basis of these facts, we find that
petitioner did not provide over half of the children’s support
1
The exact amount of the support which Ms. White actually
received is unclear. Ms. White testified that she received less
than this amount because she was on welfare at that time.
2
While Ms. White first testified that she received $1,200 in
monthly “earned income”, she later testified that her yearly
income from her employment was “less than $7,000.”
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during 1997. Petitioner therefore is not entitled to the
dependency exemption deductions which he claimed for that year.
Secs. 151(a), (c) and 152(a).
The second issue for decision is whether petitioner is
entitled to head of household filing status. Petitioner claimed
head of household filing status on his return, and respondent
changed the filing status to single in the notice of deficiency.
As is relevant here, a taxpayer is entitled to head of
household filing status with respect to children only if the
taxpayer maintains a household which is the principal place of
abode of one or more of those children. Sec. 2(b)(1).
Petitioner admits that his household was not the principal place
of abode of any of his children during 1997. Consequently,
petitioner is not entitled to head of household filing status for
that year. Id.
The third issue for decision is whether petitioner is
entitled to an earned income credit. Petitioner claimed an
earned income credit with Tristan and Harvey as qualifying
children. In the notice of deficiency, respondent disallowed the
earned income credit in full.
Subject to certain limitations, an eligible individual is
allowed a credit which is calculated as a percentage of the
individual’s earned income. Sec. 32(a)(1). Earned income
includes wages. Sec. 32(c)(2)(A). For the year in issue,
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individuals who do not have any qualifying children, and whose
earned income is $9,770 or greater are not entitled to an earned
income credit for that year. Sec. 32(a) and (b); Rev. Proc. 96-
59, 1996-2 C.B. 392. An individual with qualifying children is
entitled to a credit at higher levels of earned income and in a
larger amount than is an individual without qualifying children.
Sec. 32(a) and (b). As is relevant here, a qualifying child is a
child of a taxpayer who has the same principal place of abode as
the taxpayer for more than half of the taxable year. Sec.
32(c)(3)(A).
Petitioner claimed the earned income credit with Tristan and
Harvey as qualifying children. However, none of petitioner’s
children, including Tristan and Harvey, resided with petitioner
for any portion of 1997. Petitioner therefore had no qualifying
children during that year. See sec. 32(c)(3)(A)(ii). Because
petitioner had no qualifying children, and because he had taxable
wages of $18,546 in 1997, petitioner is not entitled to an earned
income credit in any amount for that year. Sec. 32(a) and (b);
Rev. Proc. 96-59, supra.
Finally, we briefly address an argument made by petitioner
in his petition that, because he did not receive a refund of
Federal income taxes for 1997, “the IRS [should] go after the
person who got the refund.” At trial, petitioner indicated that
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the refund for the overpayment shown on his 1997 return was
applied to his past-due child support liability.
The Commissioner is authorized to refund to a taxpayer any
overpayment the taxpayer made. Sec. 6402(a). However, where the
taxpayer is liable for past-due support, the Commissioner is
statutorily required to intercept and to remit any overpayments,
to the extent of the liability, to the State collecting the
support. Sec. 6402(c).3 Whether a refund for a given taxable
year is paid directly to a taxpayer or is intercepted for past-
due support, the Commissioner nevertheless may determine that
there is a deficiency in tax for that year. Terry v.
Commissioner, 91 T.C. 85 (1988). If the Commissioner makes such
a determination, the taxpayer is not entitled to an offset of the
refund against the amount of the deficiency. Sec. 6211(a). In
short, because the 1997 refund was remitted on petitioner’s
behalf in accordance with his obligation to pay child support,
petitioner is liable for the subsequently determined deficiency
in the tax shown on the 1997 return.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for respondent.
3
This Court does not have jurisdiction to review the
Commissioner’s interception of refunds for past-due child support
under the authority of sec. 6402(c). Sec. 6402(f).