can you claim a foster child as a dependent
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Who Can I rightfully claim as Dependent?
you can claim a "qualifying child" or "qualifying relative" if they meet requirements related to residence, relationship, age, financial support, and income. Even significant others or friends can qualify in some cases. According to the IRS, a “qualifying relative” can include an unrelated person who passes the four tests below. You cannot generally claim a married person as a dependent if they file a joint return with their spouse.
There are 5 tests that will qualify a child as a dependent as follows:
- Relationship: Must be your child, adopted child, foster-child, brother or sister, or a descendant of one of these.
- Residence: Must have the same residence for more than half the year.
- Age: Must be under age 19 or under 24 and a full-time student for at least 5 months. They can be any age if they are totally and permanently disabled.
- Support: Must not have provided more than half of their own support during the year.
- Joint Support: The child cannot file a joint return for the year.
There are 4 tests that will qualify a relative as a dependent as follows
- They are not the “qualifying child” of another taxpayer or your “qualifying child.
- Gross Income: The person cannot have a gross yearly income over the limit.
- Total Support: You provide more than half of the total support for the year.
- Member of Household or Relationship: The person must live with you all year as a member of your household or be one of the relatives that doesn’t have to live with you (Your child, grandchild, or great-grandchild, your legally adopted dependent, your stepchild, stepbrother, stepsister, your brother, sister, half-brother, or half-sister, your parent, or other direct ancestor, but not a foster parent, your stepfather or stepmother, your parent's brother or sister, your brother's or sister's child, your mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law, or daughter-in-law.
can you claim a foster child as a dependent
If you are filing a joint tax return, your spouse is not your dependent but your children are. In some instances, there can be others that you would claim as a dependent. The two categories would either be a "qualifying child" or a "qualifying relative". Let's discuss.
There are five steps to qualify a child as a dependent:
1. Relationship – The obvious and most common would be your children. In some instances, there could be others that meet this requirement. To meet this test, in addition to children, a child could be your stepchild, foster child, or a descendant of any of them (ex: grandchild). This test would also include your brother, sister, half siblings or descendants of any of them (ex: niece).
2. Residency – The child must have the same residence as you for more than half of the year.
3. Age – The person must be under the age of 19 at the end of the year in question AND younger than you (under the age of 24 if they are a full time student). They can be any age if they are permanently disabled.
4. Support – The person must not provide more than half of their support during the year.
5. Joint Return – The child cannot file a joint return for the year. For example, if you are trying to claim your daughter and she is married. If she files a tax return with her husband, you usually cannot also claim her.
There are four tests that will qualify a relative as a dependent:
1. They cannot be a "qualifying child" per the previous description.
2. Gross Income – the dependent must earn less than $3,900 in 2013. Always check on this number as the amount will change.
3. Support Test – You provide more than half of their support for the year.
4. Member of Household or Relationship – The person must live with you all year as a member of your household or be one of the relatives that doesn’t have to live with you (see IRS Publication 501 for a list of qualifying relatives).
*Remember, if you have a child during the year, they will be your dependent on the tax return for that year. Be sure to tell your tax preparer that you had a child and provide the child's legal name and social security number (as it would appear on the social security card).
As always, there can always be exceptions to some of these rules. When in doubt, contact a professional and/or refer to IRS publication 501 for guidance.
As always, we recommend that you discuss the specifics of your situation with a CPA firm.
Can I Claim Dependents Even if They Didn't Live With Me?
Claiming a dependent, including one you didn't live with during the year, allows you to take a tax-saving exemption on your federal return. This exemption is essentially a deduction for a fixed amount that increases for inflation each year. And although not living with your dependent doesn't disqualify you from claiming the exemption, you will have to satisfy certain requirements. However, the law does require that you share the same household in some circumstances.
The first of two ways you can claim a dependent is under the qualifying child rules. A qualifying child must be your natural, step, foster or adopted child, a sibling, step-sibling or a descendant of any of them. The person you want to claim must also be younger than 19, or younger than 24 if a student, and he can't provide more than half of his own support. In addition, if your qualifying child doesn't live with you for a majority of the tax year, he may still qualify as your dependent if the reason is due to an eligible “temporary absence.”
If your qualifying child is considered temporarily absent under the tax law, his time away from home – even if for the entire tax year -- is deemed to be time he lives with you for the purpose of claiming him as a dependent. The reason for the temporary absence must be related to his or your illness, education, business, vacation or military service. In other words, if the reason you don't live with your dependent is because he's serving in the military and is based in another region or abroad, is away at college or suffers from an illness that requires he live in a nursing facility, for example, it's considered a temporary absence. If, however, your child performs missionary work in a foreign country for a majority of the tax year, he can't be your dependent since the reason for his absence is unrelated to any of the permitted purposes. Moreover, your own temporary absence from the home is permissible as well.
When the person you want to claim as a dependent can't be your qualifying child, earns gross income that's less than the dependent exemption amount for the year, and you're responsible for more than one-half his support requirements, he may be a qualifying relative whom you don't have to live with to claim. Only the following relatives, however, can reside elsewhere and still be your dependent: children, stepchildren, foster children and all of their descendants; siblings, including half and stepsiblings; direct ancestors, such as your mother and grandfather; stepparents, nieces, nephews, aunts, uncles and some of your in-laws. If your dependent isn't one of these relatives, he must live with you the entire year – subject to the same temporary absence exception as under the qualifying child rules.