Taxpayers with children may be eligible for certain credits when filing their tax return. In order to claim these credits for a qualifying dependent, these criterias must be met:
- The child was under the age of 19 or under the age of 24 and a full-time student.
- The taxpayer or parent must have provided more than 50% of the support for that child.
- Child was permanently and totally disabled
In addition, there are five (5) dependency tests to assist you in determining whether you can claim the child as a dependent on your tax return.
- Relationship Test
- Gross Income
- Support Test
- Citizenship/Residency Test
- Joint Return Test
Here is a list of credits that can be claimed by taxpayers who are eligible or have qualifying dependents:
- Child Tax Credit & Credit for Other Dependents – $2,000 for children under 17 ($500 ODC)
- Earned Income Tax Credit – A benefit for working people with low to moderate income.
- Child & Dependent Care Credit – Paying for childcare while your work
- Education Credit – The American Opportunity Credit (4 years of undergraduate studies)
When claiming these credits, be sure that you meet the eligibility guidelines set forth by the IRS. If not, you may be disqualified from claiming them in future years and can also face penalties if fraud is suspected. For example, both you and your qualifying child must have a valid social security number.
The Earned Income Tax Credit (EITC), is one of the credits in particular that is looked at closely for false claims. In order to claim this credit (a) a federal tax return must be filed and (b) the taxpayer must have earned income. This credit can be claimed with or without a qualifying person but the credit is much lower when claimed without a qualifying person.
Tax return preparers are required to do due diligence when claiming the EITC for clients. Failure to do so can result in fines and penalties for misrepresenting information. A few exceptions apply to claiming this credit.
- Married filing separately, cannot claim this credit
- If you or your spouse were a non-resident for any part of the year, you cannot claim unless you are filing a joint return
- There are also special rules for members of the Military, Clergy and Ministers and those who receive disability benefits.
For additional resources, please visit the IRS website https://www.irs.gov/credits-and-deductions
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