You can claim an exemption on your federal income tax return if you have a qualifying child. To get the exemption, the child must satisfy five tests involving:
- Support, and
- Joint return
You get the exemption for each qualifying child, which can substantially lower the amount of taxes you may owe.
To satisfy the residency test, a child must have the same principal place of abode, or home, as the taxpayer for more than half of the taxable year. Temporary absences due to special circumstances such as illness, education, business, vacation or military service don't count against the time the child lived with you.
To satisfy this test, the child must be your son, daughter, stepson, stepdaughter, brother, sister, stepbrother, stepsister or a descendant of any of those persons. A child you legally adopt, or who is placed with you for legal adoption, is treated as your child for tax purposes.
Also, a foster child is treated as your child if the child has been placed with you by an authorized placement agency or by a court's judgment, decree or order.
The age test varies depending upon the tax benefit involved. In general, a child must be under age 19 (or under age 24 in the case of a full-time student) in order to be a qualifying child. Special age-related rules apply if the individual is disabled, or if you're trying to take the dependent care credit or the child credit.
If the child provided more than half of his or her own support during the tax year, the child is not a qualifying child. The IRS has a worksheet to help you figure out if this test is met.
A child who provides over half of his or her own support may be a qualifying child when it comes to the earned income credit (EIC). For purposes of the EIC, if the child is your child and a student, amounts received as scholarships for study at an educational organization are not taken into account in determining the child's support.
To be a qualifying child, the child can't file a joint return with another taxpayer - such as a spouse - for the tax year in question. There's an exception, though. If your child and the child's spouse file a joint return merely as a claim for refund, the child may be a qualifying child.
For example, your 18 year-old son and his 17-year-old wife had $800 of interest income and no other income. Neither is required to file a tax return, but taxes were taken out of their interest income. They file a joint return only to get a refund of the withheld taxes. Your son may be your qualifying child if all the other tests are met.
If a child would be a qualifying child for more than one taxpayer, such as where the child lives with a parent and a grandparent in the same residence, and more than one person claims a benefit with respect to that child, then the following "tie-breaking" rules apply:
- If only one of the individuals claiming the child as a qualifying child is the child's parent, the child is deemed the qualifying child of that parent
- If both parents claim the child and the parents don't file a joint return, then the child is deemed a qualifying child first with respect to the parent with whom the child resides for the longest period of time, and second with respect to the parent with the highest adjusted gross income
- If the child's parents don't claim the child as a dependent, then the child is considered a qualifying child for the taxpayer with the highest adjusted gross income who tries to take the exemption
These tie-breaking rules do not apply when a child is a qualifying child for multiple taxpayers but only one eligible taxpayer actually claims the child as a dependent.
The exemption for a qualifying child can have a big impact on your taxes. The IRS has a pamphlet with more details and instructions that can help you make sure you're taking the exemption properly.
Question for Your Attorney
- I took care of my sister for part of the year. Will I be able to claim her?
- With regards to a temporary absence, does the duration of time that my child spends away from home matter?
- What is the difference between a qualifying child and a qualifying relative and which applies to my situation?