As your children get older, some of the IRS rules about claiming them as dependents on your tax return change. It’s important to understand all the rules, especially since children are living with their parents longer than they did in previous generations. As is often the case when it comes to tax law, there are a lot of moving parts to consider and exceptions to every rule when it comes to claiming your children.

As your children get older, some of the IRS rules about claiming them as dependents on your tax return change. It’s important to understand all the rules, especially since children are living with their parents longer than they did in previous generations. As is often the case when it comes to tax law, there are a lot of moving parts to consider and exceptions to every rule when it comes to claiming your children.

Is There an Age Limit on Claiming My Child as a Dependent?

This is a good question, and the answer is maybe. If your child has been deemed permanently and totally disabled, there is no age limit for claiming him as a dependent. He will be a qualifying child so long as he lives with you and you provide his financial support. The rules are different for other children.

In most cases, you can only continue claiming your child until she is 18. So long as she is younger than 19 on the last day of the tax year (December 31), you may claim her. Once she turns 19, however, she is no longer your qualifying child. Of course, as usual, there is an exception to this IRS rule. You can keep on claiming your child as a dependent until she turns 24 if she is a full time student. As long as she is a full time student, you can keep claiming her until her student status changes or she turns 24.

In addition to meeting these age requirements, a qualifying child must also live with you for at least half of the year and you must pay for at least half of their support. They must also file a solo return. You cannot claim them if they file a joint return or if someone else is entitled to claim them.

Qualifying Relative – A Possible Workaround

If you can no longer claim your child as a qualifying child, all is not lost. You might still be able to claim him as a qualifying relative. The first requirement of being a qualified relative is that the person does not meet the conditions of a qualified child. Secondly, a qualified relative must live with you all year long as a member of your household or be your:

• Child
• Stepchild
• Grandchild
• Foster child
• Son or daughter-in-law
• Father or mother-in-law
• Brother or sister
• Half-brother or sister
• Parent or stepparent
• Aunt or Uncle by blood
• Nice or nephew by blood

Whatever their relation to you, a qualifying relative must have a gross income of less than $4,400 and must receive more than half of their financial support from you.

A Word on Divorce

The rules for claiming young children are generally pretty clear, but a divorce that leads to a joint custody agreement can muddy the waters. Generally, the IRS grants the deduction to the custodial parent or the one the child spends more than half of his or her nights with. The custodial parent may, however, complete and file an IRS form that allows the other parent to claim the deduction.

Another option for those who share physical custody equally is to outline the tax deduction rules in the custody agreement. The agreement may, for example, state that Mom can claim the child in even years and Dad can claim him during odd years. Whatever you decide, note that the IRS will not allow both parents to claim the child during the same tax year. It’s generally better for the parents to work it out between themselves if they are able.

Special Circumstances

There are some special circumstances in which you can claim your child as a dependent even if they don’t meet all of the qualifying child requirements. Your child sometimes counts as having lived with you all year even if they were temporarily absent. If the child was gone due to a job, school, military service, medical treatment, or vacation, they count as having lived with you during that time.

A child born at any point during the tax year is considered to have lived with you all year long, even if they are born on December 31. The same is true if a child dies or is kidnapped. The rules for kidnapping are a little more involved, however. In order to claim a kidnapped child on your tax return, law enforcement must believe they were abducted by someone other than a family member. In this instance, you may claim the child as having lived with you all year and continue to do so every year until the child is returned, presumed dead, or until the year of the child’s 19th birthday.

An IRS rule change also allows you to claim the children of your significant other as dependents, even if you are not married. So long as the child lives with you and you provide more than half of her financial support, you can claim your girlfriend or boyfriend’s child as a qualifying relative as long as they are at a suitable tax dependent age.

A Note on the EIC and the Child Tax Credit

Note that the qualified child rules are a little different for the earned income credit (EIC) and the child tax credit. A person can be your qualified relative and count as a dependent on your overall tax return without qualifying for the EIC or the child tax credit. in order to qualify for these credits, the person must be under 18 or a full-time student under the age of 24. They must also be younger than you and be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of one of these.

Let’s say, for example, that your grandmother has children young and then has a baby girl later in life. As a result, you have an aunt who is younger than you and she comes to live with your family after her mother passes away. She is 16. You may claim her as a dependent on your taxes as a qualifying relative, but she does not count as a qualifying child for the EIC or the child tax credit.

Examples of Qualifying Children

Although it seems simple at a glance, the rules for qualifying children can get tricky and difficult to untangle. Fortunately, a few examples can help.

Let’s say your son Caleb is 22 years old. He is a full-time college student living in campus housing in another state while he goes to school. You can claim Caleb as your qualifying child because he is under 24, a full-time student, and his campus housing is temporary. He is still considered to live with you.

But what if your child is married. Pretend your daughter fell madly in love at 18 and eloped even though you told her it was a bad idea. Predictably, she is now 21 and moves back in with you because she and her husband are divorcing. She decides to go back to college full-time and leaves her job to do so, leaving you to provide her financial support. You can claim her as a dependent on your tax return, but only if she and her husband don’t file a joint return. If they do, you lose the dependent deduction.

Now let’s take a look at Bob. Bob’s 30-year-old son Bob Jr. unexpectedly lost his job and moved back in with Bob. Junior lived with Bob for 8 months out of the year and, due to a problem with his unemployment benefits, received only $3,000 in income. Bob paid for Junior’s financial support as a result. Bob can’t claim Junior as a qualifying child on his tax return, but he can still claim him as a qualifying relative.

We also have Denise and her neighbor Sue. Tragically, both of their young daughters disappeared one day while they were out in the yard playing together. The police believe the children were kidnapped by Sue’s estranged husband, who is her child’s father. Denise can claim her daughter as a dependent on her tax return. Sue cannot claim her daughter, however, because the police believe her to have been kidnapped by a relative.

Finally, we have Mary. Mary lives with her boyfriend and his 10-year-old daughter. Unfortunately, Mary’s boyfriend got hurt at work in January and has spent the entire year in litigation with workmen’s compensation. He hasn’t received any income and Mary has taken over all of the bills — including the financial support of her boyfriend’s daughter. In this case, Mary can claim her boyfriend’s daughter as a dependent on her tax return as a qualifying relative, even though the child is not biologically hers.

Conclusion

While a few examples can help clarify this area of the tax law, we clearly can’t detail every possible dependent scenario here. But that doesn’t mean we can’t help. The CPAs at Picnic Tax are happy to listen to your unique circumstances and help you determine who you can claim as a dependent and under what status. We don’t want you to miss a deduction that can help you because you weren’t sure if you could take it or not. Instead, reach out to us today and know for sure that you’re claiming all of the dependents you should be. Failing to do so leaves money on the table that we would rather see in your pocket.