Earned Income Tax Credit - Qualifying Children - Relationship

Relationship

In the case of a married couple filing jointly, if one spouse is related to the child by any of the below relationships, both spouses are considered related to the child.

The claimant must be related to their qualifying child through blood, marriage, or law. The qualifying child can be:

  • a person's daughter, son, stepchild, or any further descendant (such as grandchild, great grandchild, etc.),
  • or a person's brother, sister, half sister, half brother, stepbrother, stepsister, or any further descendant (such as niece, nephew, great-nephew, great-great-niece, etc.),
  • or a foster child officially placed by an agency, court, or Indian tribal government. Authorized placement agencies include tax-exempt organizations licensed by states as well as organizations authorized by Indian tribal governments to place Native American children.
  • or an adopted child, including a child in the process of being adopted provided he or she has been lawfully placed.

A child might classify as the qualifying child of more than one adult family member, at least initially. For example, in an extended family situation, both a parent and an uncle may meet the initial standards of relationship, age, and residency to claim a particular child. In such a case, there is a further rule: If a single parent or both parents, whether married or not, can claim the child (residency and age) but choose to waive the child to a non-parent, such as a grandparent or uncle or aunt, this non-parent can claim the child only if they have a higher adjusted gross income (AGI) than any parent who has lived with the child for at least six months.

This still remains the parent's choice. Provided the parent has lived with the child for at least six months and one day, the parent can always choose to claim his or her child for purposes of the earned income credit. In a tiebreaker situation between two unmarried parents, the tiebreak goes to the parent who lived with the child for the longest. In a tiebreaker between two non-parents, the tiebreak goes to the person with the higher AGI. And in a tiebreaker between a parent and non-parent, the parent wins by definition. These tiebreaker situations only occur if more than one family member actually file tax returns in which they claim the same child. On the other hand, if the family can agree, per the above and following rules, they can engage in a limited amount of tax planning as to which family member claims the child.

Read more about this topic:  Earned Income Tax Credit, Qualifying Children

Famous quotes containing the word relationship:

    Friendship is by its very nature freer of deceit than any other relationship we can know because it is the bond least affected by striving for power, physical pleasure, or material profit, most liberated from any oath of duty or of constancy.
    Francine Du Plesssix Gray (20th century)

    Some [adolescent] girls are depressed because they have lost their warm, open relationship with their parents. They have loved and been loved by people whom they now must betray to fit into peer culture. Furthermore, they are discouraged by peers from expressing sadness at the loss of family relationships—even to say they are sad is to admit weakness and dependency.
    Mary Pipher (20th century)

    Most childhood problems don’t result from “bad” parenting, but are the inevitable result of the growing that parents and children do together. The point isn’t to head off these problems or find ways around them, but rather to work through them together and in doing so to develop a relationship of mutual trust to rely on when the next problem comes along.
    Fred Rogers (20th century)