Court denies child tax benefits after father fails to prove where sons lived
Maurice Butler v. Commissioner. United States Tax Court. No. 6448-24. T.C. Memo. 2026-116.
Maurice Butler tried to claim his sons for tax benefits in 2022. The IRS said, prove they lived with you. He couldn’t. So he lost the credits. The IRS did, however, drop the penalty. Small victories.
Holding
The Tax Court said no to Butler’s child tax credit, earned income tax credit, and head-of-household status for 2022. He’s on the hook for $7,573. The $1,515 penalty? IRS gave up on that one.
Why It Matters
The decision applies established residence requirements. Paying a child’s expenses does not by itself establish where the child lived. The disputed fact was the sons’ principal home during the tax year.
When both parents claim the same children, the higher-income parent does not automatically win. Residence controls first. Adjusted gross income breaks a tie only when the children lived with each parent for the same amount of time.
Documents must address the correct year and the disputed requirement. Butler submitted extensive financial records, but those records did not establish his sons’ living arrangements in 2022.
The penalty outcome reflects an IRS concession. The opinion does not decide whether the IRS obtained supervisory approval or whether Butler established reasonable cause.
Key Facts
Butler claimed his two sons as dependents on his 2022 return. He had AGI of $36,502, claimed head of household and claimed both the child tax credit and the earned income tax credit. The children's mother also claimed them. She had AGI of $52,038.
The IRS agreed the children met the applicable relationship, age, support and joint return requirements. The parties disagreed as to whether the children shared Butler's principal home for more than half of 2022.
Butler discussed the dates and referred to a custody log and a Court order. He didn't produce either. He attached something relating to 2023, which doesn't help at all for 2022. Wrong year, wrong evidence.
Butler supplied over 100 pages of other documents. These included expense records, mortgage information, estate records, and health insurance records. The sons' insurance ID cards didn't list an address. The records didn't resolve the residence issue.
After the trial, Butler tried to reopen the case. He didn't attach any new evidence or explain what it was. More expense records again, but still no proof of where the kids lived.