Dependent Tax Credit

[Singlelady10]

I'm divorced. My kids live with me full time. I have non-taxable income besides rental income which leaves me equal, not owing. Since I don't have taxable income, can I allow my brother to claim the dependent tax credit for my 2 kids? Their father is not allow to claim them per the divorce decree.

[Bubba Jimmy]

There is no such thing as a dependent tax credit. And no, you cannot change the tax law by allowing someone who is not legally entitled to claim your children. Your brother has to follow the law just like every other person, and the penalties for the kind of fraud he might be contemplating can be extremely expensive.

When someone begins claiming nieces and nephews that they have never claimed before on their tax return there is a large probability that the return will be scrutinized and likely audited ("examined" in IRS lingo).

[Singlelady10]

Child Tax Credit. I'm not asking about changing the law. The relationship test on the IRS website states:

Relationship Test - To claim a child for purposes of the Child Tax Credit, they must either be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister or a descendant of any of these individuals, which includes your grandchild, niece or nephew. An adopted child is always treated as your own child. An adopted child includes a child lawfully placed with you for legal adoption.

http://www.irs.gov/newsroom/article/...106182,00.html

The reason I was asking if he can claim them is because we will be moving out of state and he will be living with us. Can you explain a little more why he can't since clearly he meets the IRS relationship test.

[flyingron]

The divorce decree (at least one after 1985) has no BEARING on the IRS. If husband would meet the IRS requirements, they will allow him to claim it. However, if the children do not reside with him (at least half the year), he's not eligible to take it unless you authorize it and certain other conditions are met.

If the children reside with their uncle and he meets the OTHER tests, specifically that he qualifies to claim the child as a dependent on HIS return. Here's where it gets sticky, Uncle would have to have provided MORE THAN HALF the support. Since you seem to have income and I suspect you are also receiving child support payments, it may be very difficult for him to show those.

[Singlelady10]

Thank you flyingron. You are a big help. I appreciate it.

[Bubba Jimmy]

There are four tests to determine a qualifying child. Relationship is only one of the. The other tests are age, residency, and support. Your children are under 19 so they would pass the age test. Presumably your children do not provide over 1/2 of their own support, so they would pass the support test. However, you said they lived with you all year. Therefore they would fail the residency test, which would require that they live with your brother for over 1/2 the year. All four tests have to be met in order for them to be his qualifying child.

Your ex-husband would also be unable to pass that test. However, if he had a pre-2009 divorce decree giving him the unconditional right to claim the children then he could do so. Therefore, I completely disagree with flyingron on that particular point. Starting in 2009 the noncustodial parent has to obtain a signed form 8332 from the custodial parent, and if there are conditions (such as being current on child support) in the pre-2009 divorce decree then the form 8332 would also be required. It depends on the wording in the divorce.

[Singlelady10]

As far the support test, I was referring to the 2012 year not 2011, we will moving in June 2012.

Our divorce decree was finalized 2 weeks ago but our divorce was final March 2011.

Thanks for the explanation Bubba Jimmy.