When tax time comes for non-married parents, properly claiming dependents is vital to ensuring you get the full amount of your income back on your return. Instances exist, however, when you can be not claiming a child as a dependent and still be able to claim the child for a tax credit such as the Earned Income Tax Credit.
Under Internal Revenue Service tax law, a dependent is someone who is dependent on another taxpayer, typically the parent, and cannot claim another individual as a dependent. In the case of children, this is often the biological child of a parent or a child for whom the taxpayer provides most or all of the necessary care and support. The child has to be a citizen, resident alien or national of the United States, or a resident of Canada or Mexico, except in adoption cases. The child must have a Social Security number, individual taxpayer identification number or adoption taxpayer identification number to be claimed as a dependent. Married children who did not file returns other than to claim a refund can be qualifying dependents as well.
Defining Qualifying Child
Credits, like the Earned Income Tax Credit, place additional stipulations on dependents, so children who qualify as dependents for these credits are known as qualifying children. In general, a qualifying child must pass four tests: relationship, age, residency and support. Allowable relationships include biological children, foster children, siblings or step-siblings or the descendant of any of those. Children must be under the age of 19 before the end of the tax year or under the age of 24 if they are full-time students. They must live with the taxpayer claiming them for over half of the tax year, except in the case of birth or death. Finally, the child cannot provide more than half of his own support over the course of the tax year to be a qualifying child.
Dependency Exemption Release
In most instances involving separated or non-married parents, the parent with whom the child lives claims that child as a dependent, but the IRS allows the custodial parent to waive this right and give the non-custodial parent the dependency exemption through the Dependency Exemption Release (Form 8332). This allows the non-custodial parent to receive the exemption for the children, even though the child did not live with that parent for the majority of the year.
Earned Income Tax Credit
The Earned Income Tax Credit is a credit offered to lower income individuals and families. The number of children you can claim as qualifying children is directly related to the amount you receive for this credit. The rules for a qualifying child for this credit are the same as the general rules, with the exception of the support rule. This credit is not affected by the Dependency Exemption Release. In a situation where the custodial parent files this form, the parent with whom the child lived for over half of the year still retains the right to claim that child for the Earned Income Tax Credit purposes. This is the only way in which a taxpayer can claim the child for the Earned Income Tax Credit when not claiming that child as a dependent.
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