May States ignore reported changes in household size that affect the standard deduction?
States must act on reported changes in household size. Although a State that chooses this option is not technically required to act on a corresponding change in the household’s standard deduction, it is likely that the State’s data system would automatically recalculate the standard deduction when it processes a reported change in the household’s size. Question 4106-5: Under this provision, States must act on reported changes in earned income. What deductions are affected by changes in earned income? Answer: A reported change in earned income will affect the amount of a household’s earned income deduction and may affect the computation of the shelter deduction. Additionally, a change in earnings could have an impact on a household’s child support or dependent care deduction. The State agency could choose not to act if the household voluntarily reports changes in the amounts of these expenses.
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