‘Simplification’ Leaves Murky the Definition of a Child

One of the real hair-pulling changes in the 2004 Jobs Act for practitioners has become the new Uniform Definition of a Child. This attempt at simplification has left many practitioners struggling and caused some taxpayers to face larger tax bills for the 2005 tax year as they lost the ability to gain the deduction that was available under the former definition. In a recent issue of TAXES—The Tax Magazine, three Southeastern Oklahoma State University accounting professors tackle the sticky parts of the new definition and explain how it applies across all areas where it is now used in filing a return. All of the various issues of dependency are examined under the new definition and the problem areas are pointed out. In another article from TAXES, CCH’s Principal Analyst for Federal Tax Mark Luscombe looks at just how hard simplification really is to achieve. The new definition of a child is the perfect example of how complexity is often in the code for a reason and efforts to reduce it can have unintended consequences. And that is the case here, Luscombe notes. Fixing it, however, will have to wait for the 2007 tax year, meaning practitioners will have at least one more year to deal with this confusion.

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This story is from the CCH’s monthly Focus on Tax newsletter, which provides advise and guidance on federal and state tax issues for tax and accounting professionals.

Read this article from CCH’s Journal of Taxation of Financial Products.


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