TaxHawk® Tax Tips
Tax Advice For ParentsThe custodial parent has the right to claim the child as a dependent unless that right is released to the noncustodial parent. If released, the waiver needs to be in writing, signed, and attached to the noncustodial parent's return. The waiver can be for one year, permanent, or any other way you want to do it. Form 8332 is the official IRS waiver, but you can also write up your own waiver and use it as long as it spells out who gets the deduction and is signed by the custodial parent. One item to note is that the custodial parent still has the right to claim Head of Household status, the Earned Income Credit, and Dependent Care Credit even though they have released the right to claim the child as a dependent. However, if waived, the noncustodial parent claims the $1,000 Child Tax Credit along with the dependency exemption.
When can you claim your child as a dependent? If your child is younger than 19 at the end of the year (younger than 24 if a full-time student) and receives at least half of his or her support from you, then the child is a dependent. You can still claim your child as a dependent regardless of age if he or she has less than $3,800 of gross income and you're providing support. In considering whether you provide half of your child's support, factor in the "free rent" he or she receives from you if still living at home.
If you're a grandparent with an adult child and grand-children living at your home, you're probably providing over half of the support for your grand-children. If so, the grand-children are dependents on your tax return and you'll also claim the $1,000 Child Tax Credit. Your adult child can still claim the Earned Income Credit. Your adult child would not be your dependent if he or she makes more than $3,800.
If you're helping an adult child pay their mortgage and real estate taxes, don't directly pay the bills. Make a gift to your child and have them pay the mortgage and taxes. Unless you're a co-owner in the house, you're not entitled to take any mortgage interest or real estate taxes paid for your child's residence. Also, if you directly paid the bills, your child would not be able to deduct the interest and taxes on their return.
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