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Child Tax Credit


Steve M
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Client lives with woman and her son in Arizona. He is their sole means of support; woman has no income and child is 4 years old. Woman and child are U. S. citizens. They have lived together for 3 years and child is not the client's birth son and is not adopted. Arizona does not recognize common law marriages initiated within the state. Therefore client claims head of household and claims the woman and child as dependents. Now for the question. Can he claim a child tax credit? IRC 24 states that qualifying child for the child tax credit is same as dependency exemption + citizenship. However, when I input in dependent worksheet for ATX dependents relationship "other", no child tax credit is given. However, if I change relationship to stepchild, a child tax credit is given. Is this a quirk of ATX? According to tax code, the child qualifies for the credit, but according to ATX worksheet, child only qualifies if a relative of client. What do you all think?

Steve M

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In order to claim child tax credit, the dependent must meet the requirements for qualifying child, which include a relationship test. Unless the dependent is related, the dependent cannot be a qualifying child.

ATX sees "other" as not related, which in this case is correct.

Read up on the dependency qualifications. This is pretty basic since the change in 2008.

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>>IRC 24 states that qualifying child for the child tax credit is same as dependency exemption + citizenship<<

It certainly does NOT state that. It says, "The term 'qualifying child' means a qualifying child of the taxpayer (as defined in Section 152(c )) who has not attained age 17." Section 152(c ) is labeled Qualifying Child. Your client is claiming the exemption under Section 152(d), Qualifying Relative. If your reference book says otherwise, it is more than five years old.

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Client lives with woman and her son in Arizona. He is their sole means of support; woman has no income and child is 4 years old. Woman and child are U. S. citizens. They have lived together for 3 years and child is not the client's birth son and is not adopted. Arizona does not recognize common law marriages initiated within the state. Therefore client claims head of household and claims the woman and child as dependents. ...

Let's pause there. He is claiming them as dependents who are "qualified relatives" - in this case non-related individuals who have lived with him the whole 12 months of the year. This does not allow him to claim head of household.

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Regarding qualifying relative, IRC 152 (d) states that individual is a member of household for entire year or relationship test plus gross income and support. Both dependents meet these tests.

However, after reading your posts, I found a site on IRS that states Qualifying child for Child tax credit is actually a relative. The reason I posed the question in the first place is because the 2009 quickfinder on page 12-5 states that a qualifying child for the tax credit is the same as that for a dependency exemption except for age and citizenship. It is incorrect. That was what caused the confusion.

Thanks

Steve M

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>>It is incorrect<<

Sorry, you are way off base. Quickfinder IS correct. A qualifying child for the Child Tax Credit is exactly the same as for dependency (with the additional limits). But the child in your Arizona scenario is NOT a "qualifying child" for dependency or the credit, or Head of Household either. He is an unrelated person who qualifies as a dependent under the old member-of-household rule (renamed "Qualifying Relative" years ago). Section 152(d) allows the exemption, but nothing else. I recommend you study up on the matter. This is very basic stuff.

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>>It is incorrect<<

Sorry, you are way off base. Quickfinder IS correct. A qualifying child for the Child Tax Credit is exactly the same as for dependency (with the additional limits). But the child in your Arizona scenario is NOT a "qualifying child" for dependency or the credit, or Head of Household either. He is an unrelated person who qualifies as a dependent under the old member-of-household rule (renamed "Qualifying Relative" years ago). Section 152(d) allows the exemption, but nothing else. I recommend you study up on the matter. This is very basic stuff.

Agree with Jainen 100%. This is far too basic information to be confused about.

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