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I received an interesting question from a reader:

“Kim, what is the definition of a child in relation to tax law?”

That is an excellent question.  The correct question though in terms of tax law for the Federal government might be, “What is a qualifying child?”  For that we need to turn to Publication 501 from the IRS where they have a pretty straightforward definition as follows:

Under the “Exemptions for Dependents”  section of the publication, you are allowed one exemption for each person you can claim as a dependent.  You can claim an exemption for a dependent even if your dependent files a return.  (So if your child is making money on his or her own, they can file their own return in their own tax bracket and not drive you or you and your spouse into a higher tax bracket!).

The term “dependent” means either a qualifying child or a qualifying relative.  Today we are going to just talk about a qualifying child.  You can claim an exemption for a qualifying child (or a relative) if you meet the three tests:

1.  Dependency taxpayer test.

2.  Joint Return test.

3.  Citizen or Resident test.

For something like the Child tax credit, you need a qualifying child who was under the age of 17 at the end of the year.  For other child related tax information, please check with the IRS or your favorite tax professional. 

What is the dependency test?

If you could be claimed as a dependent by another person, you cannot claim anyone else as a dependent.  Even if you have a qualifying child or qualifying relative, you cannot claim that person as a dependent.  If you are filing a joint return and your spouse can be claimed as a dependent by someone else, you and your spouse cannot claim any dependents on your joint return.  That is the way it goes, folks.  That means if you married your sweetie and she is still considered somebody else’s dependent (her Mom and Dad’s) you cannot claim your kids (again consult with a local tax pro and talk with Mom and Dad to see what they are actually claiming for more information).

For 2007, the Tests to be a Qualifying Child are as follows:
1. The child must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsiser or a descendant of any of them.

2. The child must be under age 19 at the end of the year or under age 24 at year end and attending school full time or any age and permanently and totally disabled.

3. The child must have lived with you for more than half of the year.

4. The child must not have provided more than half of his or her own support for the year.

5. If the child meets the rules to be a qualifying child of more than one person, you must be the person entitled to claim the child as a qualifying child.

I could go on and on for weeks on qualifying child information alone but hopefully this is enough to get you started!

Kim Greenblatt

Kim Greenblatt tells you what a qualifying child is at his blog, profitable.

Tags: Business, IRS, profitable, qualifying child, taxes

This entry was posted on Tuesday, September 16th, 2008 at 12:09 am and is filed under Business. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.