Whose Child Is It Anyway? Simplifying the Definition of a Child

Abstract

Taxpayers may be eligible for certain tax benefits if they support or live with their children. Each benefit uses a unique definition of child, partly because the provisions address different tax and social policy goals. Other factors, including piecemeal efforts at tax simplification and complicated family structures, contribute to complexity and increase compliance burdens and noncompliance. A consensus is growing that the definition of child can be simplified without sacrificing important policy goals. Proposals to create a uniform definition of child are similar. The differences between the proposals highlight trade-offs that must be made between simplification and other policy objectives.

New Evidence on Taxes and the Timing of Birth

“…In order to file as head of household, an individual must satisfy the household maintenance test, by providing over half the costs of maintaining a home. There is no household maintenance test that must be satisfied in order to claim a dependent exemption (Holtzblatt and McCubbin 2003).…”

Tax Code Knowledge and Behavioral Responses Among EITC Recipients: Policy Insights from Qualitative Data

“…So they only really count two.” Sometimes claiming children was part of a deliberate strategy to maximize several tax refunds, as Karyn explains; it should be noted that what Karyn describes is perfectly legal because, in order to claim a dependent for tax purposes, one needs to support them for at least six months of the year, which was the case for Karyn's father and his granddaughters. The EITC rules for qualifying children are different and more complicated than the rules for dependents, however, with an intricate set of relationship, age, and residency qualifications as well as procedures for tiebreakers when a child qualifies with more than one person (Holtzblatt & McCubbin, ). Other times, single mothers allowed their exes, the children's fathers, or new co‐resident boyfriends to claim a child so that the men could get a refund; this usually only occurred when the partners were on good terms and the man was providing at least something in terms of formal or informal child support, and these instances were in far murkier legal waters than cases like Karyn's.…”

“…The findings presented here offer insights for policy and research. First, recent proposals to simplify the EITC eligibility criteria will likely reduce noncompliance (Greenstein & Wancheck, ; Holtzblatt & McCubbin, ). However, further simplification efforts will be more effective if they reflect the complexity of family ties and financial exchanges in low‐income households, such as allowing parents options to claim the EITC if they file their taxes separately (perhaps at a reduced rate) and providing greater simplicity and discretion in meeting the criteria to claim qualifying children.…”

“…Instability and complexity in family systems carry over to households’ financial arrangements: Nonresident fathers’ and resident partners’ contributions of time and money to children fluctuate over time, and many children receive contributions from resident stepparents alongside contributions from nonresident biological parents (Edin, Tach, & Mincy, ; Manning & Smock, ; Manning, Stewart, & Smock, ). These fluid family dynamics may complicate the determination of who ought to receive tax credits associated with children; indeed researchers have found that rates of EITC noncompliance are highest for the determination of qualifying children (Holtzblatt & McCubbin, ).…”

Case Vectors: Spatial Representations of the Law Using Document Embeddings

“…5 In practice, eligibility provisions can have undesirable consequences. In analogous work on the 6 partially overlapping definitions of child in the federal tax code, resulting in uncertainty for taxpayers about eligibility for credits (Holtzblatt and McCubbin, 2003). 6 Other work has analyzed the political incentives for complex tax legislation.…”