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Uniform Definition of Qualifying Child for 2005 and beyond

From the Working Families Tax Relief Act of 2004 came a new uniform definition of a qualifying child, beginning 1/1/05. It applies for each of the following tax benefits:

  • Dependency exemption.
  • Credit for child and dependent care expenses.
  • Child tax credits.
  • Earned income tax credit (EITC).
  • Head of household (HH).

The basic tests remain the same for most of these benefits. However, special tie-breaker rules apply if the child is the qualifying child of more than one person or if the situation involves or is a result of a divorce.

Note: There are separate rules for uniform definition of qualifying relative.  See Form 1040 Instructions, Page 20.

Qualifying Child of More Than One Person If the child is the qualifying child of more than one person, only one person can claim the child as a qualifying child for all of the following tax benefits unless the rules for children of divorced or separated parents, explained later, apply. No other person can take any of the five benefits listed above unless he or she has a different qualifying child. If two people actually claim the child as a qualifying child, the IRS will apply the following tie-breaker rules:

  1. If only one person is the child's parent, the child is treated as the qualifying child of that parent.
  2. If both people are the child's parents, the child is treated as the qualifying child of the parent with whom the child lived for the longer period of time in 2005. If the child lived with each parent for the same amount of time, the child will be considered the qualifying child of the parent with the higher adjusted gross income (AGI) for 2005.
  3. If neither person is the child's parent, the child is treated as the qualifying child of the person who had the highest AGI for 2005.

Child of Divorced or Separated Parents A child will be treated as being the qualifying child (or qualifying relative) of his or her noncustodial parent only if all of the following apply:

  1. The parents are divorced, legally separated, separated under a written agreement, or lived apart at all times during the last six months of 2005;
  2. The child received over half of his or her support for 2005 from the parents;
  3. The child is in the custody of one or both of the parents for more than half of 2005; and
  4. One of the following applies:
    • The custodial parent signs Form 8832 or a similar statement that he or she will not claim the child as a dependent of 2005.
    • A decree of divorce or separate maintenance, or written separation agreement between the parents that applies to 2005, provides that the noncustodial parent can claim the child as a dependent. If the decree or agreement went into effect before 1985, the noncustodial parent must have provided at least $600 for support for the child during 2005.

If a child is treated as the qualifying child of the noncustodial parent under the rules described previously, the noncustodial parent can claim the dependency exemption and the child tax credit for the child, but cannot claim the child as a qualifying child for HH, child and dependent care credit, or EITC.

Therefore, if the custodial parent relinquishes the exemption to the noncustodial parent via Form 8832 or other statement, the custodial parent does not relinquish the HH status, child and dependent care credit, or EITC.

Because EITC can not be taken by the noncustodial parent due to these rules, write "No" on the dotted line next to Line 66a of Form 1040, entitled "Earned income credit" (Instructions to Form 1040, Page 21).

Child Tax Credit Only Taxpayers may have to file the new Form 8901 if either of the following applies:

  • The taxpayer, or the taxpayer's spouse if filing jointly, can be claimed as a dependent on someone else's 2005 return; or
  • The taxpayer's qualifying child is married and files a joint return for 2005. Exception A joint return is allowed to be filed only to claim a refund and when no tax liability would exist for either spouse if they had filed separate returns.

Foster Child, New Rules To claim a foster child as a qualifying child for any of the five tax benefits listed previously, the child must be placed in the home by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. A foster child no longer qualifies a person to use the qualifying widow(er) filing status.

Dependents Cannot Claim Exemptions for Dependents A person who can be claimed as a dependent on someone else's tax return cannot claim any exemptions for other dependents on their own tax return.

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We do not offer legal advice. All information provided on this website is for informational purposes only and is not a substitute for proper legal advice. If you have legal questions, we recommend that you seek the advice of legal professionals.

Tax Disclaimer: To ensure compliance with IRS Rules, any U.S. federal tax advice provided in this communication is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer (i) for the purpose of avoiding tax penalties that may be imposed on the recipient or any other taxpayer under the Internal Revenue Code, or (ii) in promoting, marketing or recommending to another party a partnership or other entity, investment plan, arrangement or other transaction addressed herein.

Copyright 2017 Wink Tax Services / Wink Inc.
Last modified: January 30, 2017