When Can We Not Claim a Dependent Child on a Federal Tax Return?

Children cannot be claimed as dependents for federal tax purposes if they do not meet certain criteria to be considered qualified for an exemption. In addition, a child who qualifies as a dependent exemption may not qualify as a dependent for other credits such as the Child Tax Credit, Earned Income Tax Credit or the Child and Dependent Care Credit. It is important to understand the IRS guidelines for dependents to avoid committing tax fraud.

Age and Support Rules

You cannot claim a child as a dependent if he is more than 24 years of age. If he is between 19 and 24 years of age, you may only claim an exemption if he is enrolled as a full-time student.

A dependent child cannot provide more than half of her own support. She must be related to you: either a daughter or son, step-child, adopted child, legally placed foster child or the descendant of one of these. Minor siblings, step-siblings, half-siblings and their descendants also qualify.

Foreign students living in your home do not qualify as dependent children for tax purposes.

Dependent Claim Rules

You cannot claim a child as a dependent if you can be claimed as a dependent by someone else. For example, if you are 18 years of age, live with your parents, and receive more than half of your support from them, you cannot claim your child as a dependent. Your child does qualify as an additional dependent for your parents if he has lived in their home for more than half the year.

You cannot claim a child as a dependent if she is claimed by someone else. If she is married and files a joint tax return, you cannot claim her as a dependent unless she only receives a tax refund and meets all other qualification standards.

Residency and Citizenship Rules

A dependent child must be a U.S. citizen or legal resident. She can also be a U.S. national if you are in American Samoa or the Northern Mariana Islands. Dependent children who are residents of Mexico or Canada may only be claimed on tax forms if they are not legal residents of the United States and do not receive income from sources within the U.S.

A child must live with you more than six months out of the year. A child who would normally live with you but is away at camp, visiting friends, at school or in the hospital does still fulfill the residency requirement.

If parents are divorced or do not live together and split custody perfectly equally between them, the child can only be claimed by the parent with the larger adjusted gross income. This can be overturned if the custodial parent gives up his right to an exemption via the divorce decree or by completing IRS Form 8332.

Dependent Qualification for Tax Credits

If your child qualifies as a dependent for a tax exemption, she may not qualify as a dependent for other tax credits.

The Child Tax Credit requires a dependent to be under 17 years of age. He must be a U.S. citizen, national, or legal resident. There is no exception for full-time students or residents of Canada or Mexico.

The Earned Income Tax Credit requires that the child be a resident of the U.S. for at least six months of the year. U.S. territories and possessions such as Puerto Rico and Guam do not fill the residency requirement.

You may not claim a credit for child care expenses for a child over 13 years of age unless the child is physically or mentally disabled and unable to care for herself.

Penalty

If you claim a dependent who does not meet the IRS qualifications on your tax return you are committing tax fraud. Currently you may be charged the additional tax you did not pay due to the exemption or credit plus an additional penalty of 75 percent of that value and any interest accrued between the time the tax was due and discovery of the fraud.

References

• IRS: Publication 501: Exemptions, Standard Deduction, and Filing Information
• Marketwatch: Properly Defined Dependents Can Pay Off at Tax Time
• IRS: Publication 504: Divorced or Separated Individuals
• IRS: Individual Filer Notices - Penalty, Interest, and Other Explanations 05 through 07
• IRS: Earned Income Tax Credit Qualifying Child Rules
• IRS: Publication 972: Child Tax Credit