Child Tax Dependent Demystified

Is Your Child STILL Your Dependent?
In many cases people just assume their children are dependents. Sometimes they’re not. This dependency status also determines whether or not you can claim other deductions and tax credits, so it’s important to evaluate this correctly. There can be a lot of tax dollars at stake.

The child you decide to claim as a dependent must be a “qualifying child or qualifying relative.” There are specific rules for each of these. For purposes of this article we will discuss qualifying child. Details about qualifying child can be found summarized in Table 3-1.

Here’s what most need to know:

Qualifying Child Dependent

To qualify as your dependent, the child must meet all 5 tests below

  1. Relationship Test. To think about it logically, the child must be within your bloodline. In addition to a son or daughter, it can be a sibling or one of their children. This has been expanded to include adopted children and foster children.
  1. Age Test. Must be under the age of 19 on the last day of the calendar year. If your child has his/her 19th birthday on December 31st, you’re out of luck. Continuing education is encouraged, and the age for college students is increased to age 24. So a college student, even if they’re living on campus or in an apartment near school is still your dependent. An exception is a disabled child, and this is an entirely different subject.
  1. Residency Test. Your child must be a US citizen, a US resident alien, US national, or resident of Mexico or Canada. This has become more important more recently with the current immigration situations. Also, the child must have lived with you for more than one half of the year. Since college is considered a temporary absence, your college students still qualify. There are a few other exceptions, like the year in which your child is born. Also there are specific exceptions for divorced parents and are worked out in the marital settlement agreement.
  1. Support Test. You must have provided more than one half the support of the child. If someone else pays more than half, or if your child is very ambitious and works to pay their own way, they may not qualify. However your child can be encouraged to work and save as much money as they can. As long as their earnings are saved and not spent on their support, their income won’t affect their dependency status.
  1. Joint Return Test. To be a dependent your child must not have filed a joint return with a spouse. This applies even if your child is married or separated and living with you. It only makes sense. You cannot double dip and have two people claim an exemption for the same person.

In the case of divorced or separated parents, if both claim the same child as a dependent, they WILL hear from the IRS. Of course if you are filing a joint return and claiming your child, this is not a concern.

In most cases this is straight forward – your child who is either under the age of 19 or a college student under the age of 24 that lives with you is your dependent. However, due to the changing times and different family structures and situations that have evolved, there are cases that require review.

My clients continue to ask this question and agree it’s best to have all the facts and leave nothing to chance.

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Ellen is a Women’s Financial Specialist and has been a federally licensed tax practitioner for more than 25 years. She has expanded from the divorce specialty to a broader financial practice, helping women in many stages of life set up their finances on autopilot. She is also the author of the popular e-book "Divorce Starter Tools Women Need."

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