Child Law

US Tax Law – Uniform Definition Of a Child

On October 4, 2004, President Bush signed into law the Working Families Tax Relief Act of 2004 (P. L. 108-311). The Act, according to the Joint Committee on Taxation, will cut taxes by some $146 billion over the next 10 years.

There are many provisions in this Act which will assist working families. This article will focus on only one provision, the “uniform definition of a child. ”

The purpose of the provision was to simplify the tax code by adopting a uniform definition of a child for the dependency exemption, the child credit, the earned income credit (EIC), the dependent care credit, and head-of-household filing status.

In general, under previous law a dependency exemption was allowed if a taxpayer could show that they met five basic tests. Under the new definition, a dependency exemption is allowed for an individual who would meet the requirements of, and thus qualify as the taxpayer’s “qualifying child” or “qualifying relative. ”

There are some circumstances in which an otherwise qualifying individual (qualifying child or qualifying relative) will not be considered a dependent in the following situations. The individual is a dependent of another taxpayer; therefore, that individual can have no dependents. The individual files a joint return, and the individual is not a citizen or resident of the united states or a country contiguous to the united states.

As a general rule, there are four tests which must be met in order to be considered a qualifying child

1. Relationship

2. Member of household

3. Age

4. Self-support

The relationship test is met if the individual is a child of the taxpayer or a descendant of a child; or a brother, sister, stepbrother or stepsister of the taxpayer or a descendant of any of these individuals.

The term “child” includes son, daughter, stepson or stepdaughter of the taxpayer, or an “eligible foster” child of the taxpayer.

Under this provision an adopted child or a child lawfully placed with the taxpayer for adoption is treated as a child by blood and an “eligible foster” child is an individual placed with the taxpayer by an authorized placement agency or court.

The member of household test requires that the individual must have had the same principal place of abode as the taxpayer for more than half the tax year.

Because the taxpayer no longer has to provide over half of the support of an individual meeting the requirements to be a qualifying child, more than one taxpayer could qualify to claim the individual as a dependent.

If more than one taxpayer is entitled to and does claim the individual as a dependent on the tax return, there are provisions to determine which taxpayer will be allowed the dependency exemption.
If one of the taxpayers claiming the dependency is the individual’s parent, then the parent will receive the dependency exemption.

If both parents are claiming the individual on separate returns, then the one with whom the individual resided the longest during the year will be entitled to the exemption.

If the individual resided for an equal amount of time with each, then the parent with the highest adjusted gross income will receive the exemption.

If neither of the taxpayers are the individual’s parents, then the one with the highest adjusted gross income will be allowed the dependency.
This is a partial overview of the new Qualifying Child rules. I hope this article has helped to clarify this rule.