February 24, 2017 8:00 am

Do You Have a Qualifying Child?

There are many tax breaks that you may take if you have a qualifying child. Unfortunately, there is no single definition for all of these tax breaks. Here are the different definitions; you may be eligible for one or more of these tax breaks.

Basic definition

The same definition of a qualifying child is used for the following purposes:

  • Head of household status
  • Qualifying widow(er)
  • Dependency exemption
  • Reporting a child’s medical expenses on a taxpayer’s return
  • 10% early distribution penalty exception for education/medical costs for a dependent

The basic rules require all of the following conditions to be met:

  • The child has the same principal residence as the taxpayer for more than half the year (without regard to any temporary absences).
  • The child is under age 19 at the end of the year, or is under age 24 at the end of the year and a full-time student for at least five months. However, a child who is totally and permanently disabled can be a qualifying child without regard to age or student status.
  • The child is younger than the taxpayer.
  • The child did not provide more than half of his/her support.
  • If married, the child does not file a joint return (other than to obtain a tax refund).
  • The child is a U.S. citizen or resident alien (including American territories) or a resident of Canada or Mexico.
  • The child has a tax identification number.

Earned income tax credit

While workers with no qualifying child can receive a modest earned income tax credit (EITC), the amount of the credit grows with the number of qualifying children. Basically, the definitions are the same. However, until now there was some distinction for an “authorized placement agency” for a child placed in a taxpayer’s home for adoption. There was also a difference in the definition of figuring income in the case of a “tie breaker” (where two or more taxpayers are potentially eligible to claim the child as a dependent and to claim the earned income tax credit).

The IRS has proposed regulations that would conform the definition of a qualifying child for the dependency exemption with the definition for the EITC. The proposed regulations provide that if a taxpayer meets the definition for a qualifying child for purposes of the dependency exemption but cannot be claimed because of the tie-breaker rule, then the child is not a qualifying child for purposes of the EITC. However, the taxpayer may still claim the modest EITC without a qualifying child. While these regulations are not effective until they are finalized, taxpayers may choose to apply them to any open tax year.

Child tax credit

The child tax credit has a specific age limit. The child cannot have reached the age of 17 by the end of the year. This age limit applies regardless of whether the child is permanently and totally disabled.

Dependent care credit

The child and dependent care credit has its own specific age limit. Only expenses up until the child becomes 13 years old can be taken into account. Thus, if a child turns age 13 during the year, expenses up to the 13th birthday can be part of the tax credit; expenses thereafter cannot.

If the child is older than age 13 but is physically or mentally incapable of self-care, the child is still a qualifying child for this purpose.

Coverdell ESAs

Contributions to an account for a Coverdell Education Savings Account (ESA) are permitted only until the child reaches age 18. However, contributions can continue to be made for an older child who is considered a “special needs beneficiary.” This is someone who requires additional time to complete an education because of a physical, mental, or emotional condition.

ABLE account

Contributions to an account for a disabled individual can only be made if the disability occurred before the age of 26.

Conclusion

If you are supporting or contributing to the support of your child, be sure to review all of the potential tax breaks available to you. Then determine which ones can be claimed based on the varying definitions.

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Tax Glossary

Qualified tuition program (QTP)

A state-sponsored college savings plan or prepayment plan, or a prepayment plan established by a private college.

More terms