Dependent child deductions, credits and exemptions: Who claims?

Claiming your dependent child.

Your child may be dependent upon you for most everything, but how does Uncle Sam establish the eligibility of your dependent child based on the IRS’s version of a family tree?

It’s usually easy to see who someone considers as being their child. There’s a big grin right before they say “Yep, that’s my kid all right!”

We’ve all heard those comments, probably said them ourselves, or still remember when somebody said things like that about us. The IRS, however, is not so giddy about who gets to claim child credits, exemptions and child dependent use.

Before you can claim your child or children as your dependent, consider the following:

• Are they a citizen or resident? The person must be a U.S. citizen, a U.S. national, a U.S. resident, or a resident of Canada or Mexico. Many people wonder if they can claim a foreign-exchange student who temporarily lives with them. The answer is maybe, but only if they meet this requirement.
• Are you the only person claiming them as a dependent? You can’t claim someone who takes a personal exemption for himself or claims another dependent on his own tax form.
• Are they filing a joint return? You cannot claim someone who is married and files a joint tax return. Say you support your married teenaged son: If he files a joint return with his spouse, you can’t claim him as a dependent.

You must also be able to answer “Yes” to all of the following questions:

• Are they related to you? The child can be your son, daughter, stepchild, eligible foster child, brother, sister, half brother, half sister, stepbrother, stepsister, adopted child or an offspring of any of them.
• Do they meet the age requirement? Your child must be under age 19 or, if a full-time student, under age 24. There is no age limit if your child is permanently and totally disabled.
• Do they live with you? Your child must live with you for more than half the year, but several exceptions apply.
• Do you financially support them? Your child may have a job, but that job cannot provide more than half of her support.

What else?

Are you the only person claiming your child? This requirement commonly applies to children of divorced parents. “Tie breaker rules,” found in IRS Publication 501, establish income, parentage and residency requirements for claiming a child. Many divorced or legally separated parents have differences of opinion on dependent status and exemptions and the issue can become messy.

Are you in the process of adopting? As a prospective adoptive parent in the process of adopting a U.S. citizen or resident, you’ll need a taxpayer identifying number (TIN) to claim a dependency exemption and, if eligible, a child tax credit for the child who is being adopted. If you have been unable to obtain the child’s social security number, you should request an adoption taxpayer identification number (ATIN) or individual taxpayer identification number (ITIN). You can’t claim the child tax credit on either your original or an amended return if your child doesn’t have an SSN, ATIN, or ITIN by the due date of your return (including extensions), even if your child later gets one of those numbers.  If the child isn’t a U.S. citizen or resident, and if the child qualifies as a dependent, a TIN is still required.

Anything else?

Usually. You may not be sure as to whether you can or should claim a deduction or exemption for a child. The IRS may have a YES or NO answer, but there’s usually an IF or BUT somewhere that could change the decision up think is best. Sound complicated? Sure does, it’s the IRS.

What’s the bottom line?

If you have questions, contact us. Then make sure the kids are having a great time. You’ll have that big grin again!