The Internal Revenue Services is strict when it reviews child tax credits. The tax law allows a deduction for each dependent the taxpayer is supporting. A dependent is defined as a qualifying child or qualifying relative under Section 152 (a).
Section 152 sets strict standards as to who can be claimed as a qualifying child or qualifying relative. One of the requirements to be a qualifying child is that the child must be the taxpayer’s child, sibling, stepsibling, or a descendant of one of these relatives. For each qualifying child, a child tax credit is allowed in the amount of $1,000 to the taxpayer.
If a child does not meet these requirements for a qualifying child, they can still be claimed as a dependent, if the child meets the qualifying relative requirement for the year in question. To be a qualifying relative, the individual must live in the same residence as the taxpayer for the entire year and the taxpayer must also provide over one half of the support going towards the individual.
In 2008, a taxpayer took in and cared for two of her cousin’s children, and raised them as if they were her own children. The children lived with her for the entire year. The taxpayer acted as the guardian, and the children were never placed in foster care, had contact with child protective services, nor were they adopted by her. On her 2008 Form 1040, the taxpayer claimed her cousin’s children as dependents, and claimed a $1,950 child tax credit. The IRS disallowed this claim.
The taxpayers’ cousin’s children did not meet the standard for qualifying children under the Tax Code, and the IRS was correct in disallowing the child tax credit to her. The IRS did allow the taxpayer to claim the children as dependents, because each child met the requirements of a qualifying relative.
The Tax Code is a complex document that can be interpreted by the IRS in a way that the taxpayer may not understand or agree with. Having an experienced New York Tax Lawyer help you with your tax problems is a way to better understand the tax law.
