Abstract: Every qualifying child claimed on a tax return neednÕt be a biological child. IRS rules say that a variety of individuals may qualify, under the right circumstances. This article explains why this is important and discusses some of the criteria for identifying qualifying child dependents.
Identifying qualifying children for tax purposes
As you file your 2016 income tax return, you may be wondering whether youÕre
eligible for tax breaks related to a niece who lives with you, or perhaps a
stepson who spends only part of the year in your home. It all depends on
whether, for federal tax purposes, that person is your Òqualifying child.Ó
Widely
applicable
In an effort to simplify the tax code and eliminate confusion, Congress
established a uniform definition of Òqualifying childÓ as part of the Working
Families Tax Relief Act of 2004. The definition applies for purposes of several
child-related tax benefits, such as:
á Dependency
exemptions,
á The child
tax credit,
á The child
and dependent care credit, and
á Head-of-household
filing status.
The definition relies on residency rather than requiring that you have
provided more than half of a dependentÕs support, as was the case years ago.
4 tests
to pass
More specifically, a qualifying child must meet four tests:
1.
Relationship. The
definition applies to your child (including one whoÕs adopted or whoÕs an
eligible foster child), stepchild, brother, sister, stepbrother or stepsister. It
also includes any of their descendants. So, for example, your grandchildren,
nieces and nephews also qualify.
2.
Age. A child
must be under age 13 when the care was provided to qualify for the child and
dependent care credit, under age 17 (as of the end of the year) for the child
credit and under age 19 (age 24 for a full-time student) for the other tax
benefits. Except for the child credit, thereÕs no age limit for a permanently
disabled person.
3.
Residence. The
child must share your principal place of abode for more than half the year,
which includes time spent away from home because of school, military service or
illness.
4.
Support. ItÕs no
longer necessary for you to provide more than half of a childÕs support. But
the qualifying child generally canÕt provide more than half of his or her own
support.
Under the current definition, the child must be a citizen or resident of
the United States, Canada or Mexico to qualify. However, if the child files a
joint return, he or she wonÕt qualify. If more than one person claims a benefit
with respect to the same child, the tax code specifies whoÕs entitled to tax
benefits.
If two or more people are eligible to claim the same child as a
dependent, they can decide among themselves who will claim the tax benefits. In
the event that more than one person actually claims those benefits, there are a
variety of rules in place to break the tie.
Further
questions
As you can see, the Internal Revenue Code recognizes that families take care of each other and not every child claimed in relation to tax benefits will be a biological child. If you have further questions about this topic, please contact our firm.
© 2017