Claiming a Child on Your Federal Tax Return

Recent tax law changes have provided greater clarity in the rules regarding claiming a dependent child on your Federal tax return. The "Uniform Definition of a Child" became effective with the Working Families Tax Relief Act of 2004. This law cleared up some ambiguity regarding who has the right to claim a child and benefit from the dependency exemption, the child tax credit, the earned income credit (EIC), the child and dependent care credit, and the head of household (HOH) status.

The uniform definition of a child has four tests for claiming a child:


1. Dependent children must live with the taxpayer for more than 6 months of the tax year;

2. Dependent must be a qualifying relative (born or legally adopted child of taxpayer, legitimate foster child, brother, sister, stepbrother, or stepsister of the taxpayer or descendant of such a relative);

3. The child must be under age 19 at the end of the tax year if not a full-time student or under age 24 if a full-time student;

4. In addition, the dependent child must not provide more than 50% of his or her own support for the calendar year.

Simple, right? Not exactly. There are instances where two people might try and claim the same child and meet several of the above tests. In those instances; there are "tie-breakers" or rules to sort out the one who can claim the kids. If two folks claim the same child on separate tax returns, only one will get the dependency exemption. The parent will get that right if the other party claiming the child is not a parent. If no parent is involved, the taxpayer with the higher adjusted gross income (AGI) will claim the qualifying child. If the child is claimed by two parents on separate returns, the child will be given to the one with whom the child lived the longest during the tax year. If the child lived the same amount of time with both, the child goes to the parent with the highest AGI. A taxpayer may sign a Form 8332 and grant a non-custodial parent the right to claim a child.

There are other factors to consider in situations where another person might try and claim your dependents. The first person to file a tax return may be given the dependents and the EIC etc by IRS. f that happens, you may be unable to efile and claim the kids as the return will be rejected electronically. In this situation a paper return can be filed with the dependents claimed. Once IRS gets the return and processes it, they will notify you of the discrepancy. An opportunity will be given to "prove" who is the taxpayer that may claim the child. Should a paper return claiming a child be upheld, a refund will generate and the other person who got a bogus refund will face a tax assessment. The IRS is cracking down hard on EIC fraud. Do not try and "trade off" dependents as there are severe penalties for abuse of the EIC.

Claiming a Child on Your Federal Tax Return

James Robert Coleman, E.A., A.T.A.
Enrolled Agent & Accredited Tax Advisor
Member: National Association of Enrolled Agents
Former IRS Revenue Officer, GS-11