Taxpayers who meet certain income level may qualify for Earned Income Tax Credit (EITC) that helps lower the overall tax liability. Besides income there is one more category that determines the final amount of the credit and it is a number of qualifying children one can claim as dependents.
Earned Income Tax Credit isn’t the only benefit one can claim having children or “qualifying children”. Other benefits include:
- Filing as Head of Household
- Child tax credit
- Exemption for a dependent
So who exactly is a qualifying child?
The IRS devised the following test to determine that. The following are steps that need to be met:
- a child must have a valid social security number (unless it was born and died in 2013).
- must live with you or your spouse, if filing a joint return, in the U.S. (50 continental states) for at least than 6 months.
- a child must be your son, daughter, adopted child, stepchild, or foster child; or brother, sister, half brother or half sister, grandchild, or any descendent of them (niece, nephew, etc).
- a child must be of certain age.
- younger than you and younger than 19.
- younger than you and younger than 24 and a full-time student.
- any age if permanently and totally disabled.
- a child cannot file a joint return for that year although there are few exceptions. See Publication 596 for details.
In order to be considered a qualifying child, all of the conditions must be met.
Few things to consider:
- a qualifying child can only be used by one person to claim EITC.
- in case you are separated and Married Filing Separately it is important to maintain a record of when the child stayed with you, especially in situation when the number of days the child spends with you and the other parent is very similar. In case the child spent the same number of days with both parents, the parent with higher income can claim the child as a dependent.
- to claim other benefits of having a qualified child, don’t assume the details of each tests are the same. The steps are the same but specific requirements may differ.