Uniform Definition Of A Child
In 2008, the Internal Revenue Service (IRS) issued a clarification to the Uniform Definition Of A Child that went into effect after December 31, 2004 that stated that taxpayers who live with an unrelated child and that child's parent may be able to claim the child as a dependent under the qualifying relative rules.
The uniform definition of a child include:
- Natural child--your son or daughter
- Stepchild--your stepson or stepdaughter
- Adopted child--your legally adopted child or a child placed with you for legal adoption
- Foster child--a child that is placed with you by an authorized agency, decree, or judgment by a court of competent jurisdiction
- Residence--child must have the same main home as you for at least more than half of the year
- Age--child must be under 19 years old, a full time student under age 24
- Disability--child is permanently and totally disabled
- Support--child must not provide more than half of their own support.
- Full time students--scholarships for study are not considered amounts paid for support
The tax benefits affected by this definition include the dependent exemption, Head of Household filing status, Credit for Child and Dependent Care Expenses, Child Tax Credit, and Earned Income Credit.
The following tests must be met in addition to the other standards in order to claim an exemption for a qualifying child:
- Citizenship--the child must be a U.S. citizen or national or a resident of the U.S., Canada, or Mexico. This exemption is for certain adopted children.
- Joint Return--If married, the qualifying child must not file a joint return for the year, unless the return is filed only as a claim for refund and not tax liability would exist for either the child or their spouse if they had filed separate returns.
If a child does not meet the rules for being a qualifying child, they may qualify as a dependent under the qualifying relative tests.
- Head of Household--To be a qualifying child for the Head of Household (HOH) status, the child must be a dependent relative or your qualifying child as described by the qualifying child rule.
- Credit for Child and Dependent Care Expenses--A person is your qualifying child for the Credit for Child and Dependent Care Expenses if they meet all the earlier tests with a change to the Age Test. The child must be either under age 13 when the care was provided, or your dependent who was physically or mentally unable to care for themselves.
- Child Tax Credit--A child who qualifies you for this credit must be your qualifying child as described by the four qualifying child rules except for the Age Test and the child must be under age 17.
- Earned Income Credit--A qualifying individual for the Earned Income Credit must be your qualifying child. The Support Test does not apply for Earned Income Credit purposes.
When a child is a qualifying child for more than one individual, you will need to decide who may claim the tax benefits for that child. There are tie-breaker rules to make this decision easy for your. If a child would be a qualifying child for more than one person and more than one person claims the child, the following tie-breaker rules apply.
- If only one of the individuals is the child's parent, the parent can claim the benefits.
- If both individuals are the child's parents and they do not file a joint return together, the parent with who the child lived the longest period of time during the year can claim the benefits. If the child lived with both parents the same amount of time, the parent with the highest adjusted gross income can claim the benefit.
If none of the individuals are the child's parents, the taxpayer with the highest adjusted gross income can claim the benefit.
The special rule for divorced or separated parents is the only condition under which tax benefits for one qualifying child may be split between two taxpayers. Under this provision, if the custodial parent allows the non custodial parent to claim the dependent exemption, the non custodial parent can also claim the Child Tax Credit if they otherwise qualify. The custodial parent can use the Head of Household filing status and claim Earned Income Credit, and the Dependent and Child Care Credit if they meet the additional rules for each of these benefits.