Parents may only claim the child tax credit for a child who is considered a qualifying child by the IRS. Specific criteria for the child tax credit must be met to pass the qualifying child test. Typically, the custodial parent is the one allowed to take all credits and exemptions related to a child. Exceptions do exist which may allow a non-custodial parent to claim the child.
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According to the IRS, a qualifying child must meet several criteria for purposes of the child tax credit. The child must be a son, daughter, stepchild, foster child, brother, sister, step-sibling or a descendant. The child must be under 17 years of age at the end of the year, must not have provided more than half of his support and must be claimed as a dependent on your tax return. The child must also have lived with you for more than half of the year and be a U.S. citizen, national or resident alien.
Exceptions to Residency
According to the IRS, the birth or death of a child is an exception to the residency rule. If your child was born or died during the year, she is considered to have lived with you for the entire year if your home was her home for the entire time she was alive. The child is considered to have lived with you during temporary absences for purposes such as school, vacation, business, medical care or military service. Special rules also apply for kidnapped children.
The custodial parent can claim the child as a qualifying child in most cases because of the residency test. According to the IRS, the custodial parent is the one with whom the child lived with for the greater number of nights during the year. The child is considered as living with the parent each night he sleeps at the parent's home, even if that parent is absent, or if he is in the company of that parent at an alternate location, such as on vacation.
If both parents meet the residency criteria because the child lived with each of them for an equal number of nights, a special rule will determine which parent can take the credit. The parent with the higher adjusted gross income is allowed to claim the child. If the child was away from both parents for any night during the year, such as staying with a friend or another relative, credit for the night is given to the parent who would normally have had the child.
The IRS will allow a non-custodial parent to claim the child under a special rule for children of divorced or separated parents. The non-custodial parent is the one with whom the child does not live for the greater number of nights. A non-custodial parent may claim the child as a qualifying child if the custodial parent signs Form 8332 or a similar statement, releasing claim to the child as a dependent. The child must also have received more than half of her support from the parents and have lived in the custody of at least one parent for more than half of the year. A divorce decree may also give the non-custodial parent the exemption if it states that the custodial parent will not claim the child as a dependent and lists the years for which the claim is released.
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