Beginning in 2005, the Internal Revenue Service (IRS) defines a qualifying child as someone who meets the same four tests: the relationship test, the residency test, the age test and the support test. The qualifying child designation applies to the:
- Dependency exemption
- Head of household filing status
- Earned income credit
- Child tax credit, and
- Credit for child and dependent care expenses.
The IRS announcement can be found on their Web site.
To meet the relationship test, the child must be the taxpayer's child (including an adopted child, stepchild, or eligible foster child) brother, sister, stepbrother, stepsister, or a descendent of one of these relatives.
The child must live with the taxpayer at least half of the year to meet the residency test, with the exceptions of a child who was born or died during the year, or who was absent for special reasons, including attending school, or for medical care, etc. Certain exceptions are made for children of divorced parents.
The age of the qualifying child will differ depending on the tax benefit. The child must be under 19, or a full time student under age 24 at the end of the year, to be a qualifying child for the dependency exemption, head of household filing status, and the earned income credit. The child must be under the age of 17 for the taxpayer to claim a child tax credit, and under the age of 13 for the credit for child and dependent care expenses.
A child cannot have provided over half of his or her own support during the year to meet the support test.
In addition, the qualifying child must also be a U.S. citizen, U.S. national, or a resident of the United States, Canada, or Mexico. An exception applies for certain adopted children.
When a child can be the qualifying child of more than one person, only one person can treat the child as a qualifying child. When individuals cannot agree on who will claim the child, the IRS uses the Tie-Breaker Rule.
If the qualifying child is married, he or she cannot file a joint return unless the return is filed only as a claim for refund. No tax liability would exist for either spouse it they had filed separate returns.
Additional information about children of divorced or separated parents is found in IRS Publication 501, Exemptions, Standard Deduction, and Filing Information. For additional rules that apply to child tax credit and dependent care expenses, the taxpayers and practitioners may refer to Publication 972, Child Tax Credit and Publication 503, Child and Dependent Care Expenses.