US Taxes & the Child Dependency Exemption
The following article will discuss the requirements that must be met in order to claim children as dependents, and requirements if non-custodial parents want to claim the exemption.
We will also discuss the rules for “breaking ties”, how custodial parents can voluntarily release the exemption to the other parent and also a recent decision by the Tax Court that considered this issue.
What are the Requirements to Claim the Exemption?
A taxpayer must meet all the following requirements, or the IRS will disallow the exemption. The child that is being claimed as a dependent must:
- Have resided with the taxpayer over half of the year. Absences of a temporary nature (such as being away for school) do not get considered. The exemption can be claimed for children born within the tax year if that child was living with the taxpayer after being born for more than half of the remainder of that year. Children who are stillborn cannot be claimed, but children who lived for even a moment outside the womb do qualify.
- Have been under the age of 19 as of December 31. (Birth date is considered as December 31 when born January 1.) The age is 24 for a child who is a student full time (according to school rules), for at least five months out of the year. These do not need to be consecutive.
- Be younger in age than the person claiming the exemption, including a spouse if filing jointly. These age requirements are not applicable to a child who is totally and permanently disabled.
- Not have provided over half of their support themselves. The parents are not required to provide over half the support of the child. This tests only for relatives who are being claimed. The definition of support includes things like room and board both at home and at school, health care, education expenses, clothing, transportation costs (cars must have been registered under the name of the child’s), expenses for operating a car that is registered to the parents, equipment for recreation and athletic events, wedding expenses, entertainment, music and dancing lessons, musical instruments, and summer camp. Included in the child’s support are savings as well as other income (like social security and other government payments), if the money is spent by the child themselves for purposes of supporting themselves.
- Have their social security number or taxpayer identification number (for non-resident and resident aliens) reported on the income tax return. Without this number, the IRS disallows the exemption.
- Not file a return jointly if they are married, unless it is filed only to get a refund when no taxes are due.
- Be a citizen of the US, a resident alien, resident of Mexico or Canada, a United States national owing allegiance to US (a person born within the North Mariana Islands or American Samoa who isn’t a naturalized citizen of the US).
Whole Story at TFE.