What You Need to Know About Personal Back Taxes & Tax Debt

Can a Grandparent Claim a Grandchild on Taxes

July 12, 2018

If you take care of your grandchild on a regular basis, you might have a case for claiming him or her on your taxes. This depends on a variety of factors, so you’ll have to be sure you follow the stipulations closely.

The IRS, or Internal Revenue Service, is strict when it comes to write-offs and deductions.

You can’t claim a grandchild if you only take care of him a couple of times a week as this qualifies as a part-time carer situation. In that case, the IRS might see you as more of a babysitter than a primary caregiver.

This is particularly the case if you have retired and are making less than your adult child.

But there are instances where you can benefit from claiming your grandchild on your taxes.

So, Can a Grandparent Claim a Grandchild on Taxes?

The answer isn’t black-and-white, and simply put is yes and no. There are several caveats and intricacies must be aware of in order to do so.

You can’t claim a grandchild if you care for him a couple of times a week. Instead, your grandchild must live with you for at least six months out of the year.

This rule is fairly strict and straightforward.

You can’t claim a grandchild on your taxes if you don’t live with him for the allotted time. It doesn’t matter if you pay for all your adult child and grandchild’s expenses; they must be living under the same roof as you for at least half of the year.

Two People Can’t Claim the Same Child

If your grandchild lives with you for six months out of the year and your adult child six months out of the year, this doesn’t mean you both qualify for the tax credit. Instead, only one person can claim the same dependent.

The IRS has pretty simple rules for deciding who has the right to do so. Firstly, the child’s parent always has the right to claim unless the parent and child live under your roof and both are your dependents (more on that in a moment).

Even if your adult child is no longer with the other parent, both parents must waive their rights to claim the tax credit before you can.

Once your adult child has decided to waive his or her right to collect the tax credit, there is still one other hurdle.

Just because your adult child decides not to claim your child, it doesn’t mean you’re home-free. Instead, you have to make more money than either your adult child or your grandchild’s other parent.

If your adult child and/or their other parent both decide not to use the tax credit and your income is still less than their’s, the credit goes unused.

No matter the relationship with your adult children, or your grandchild’s other parent, it is better for someone to claim it. Otherwise, this is $3,800 of credit that has been forfeited.

Evaluate your tax situation

By evaluating your tax situation, you can identify areas where you may be able to reduce your tax burden and make informed decisions about your financial future.

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Other Salary Considerations

A retired grandparent can claim their grandchild on their taxes, but their salary and income have to meet certain requirements.

To qualify, you must have worked for a company or run your own business before retiring. Disability benefits and union strike benefits also count toward income if you began receiving them before retirement age.

There is also an upper limit on your investments if you wish to claim your grandchild on your taxes. For the EIC (Earned Income Credit), your investment income must be $3,500 or less.

If you are still working or earning money through rental property or other ventures, there is an upper limit on salary as well.

Depending on your marital status and the number of dependents you’re claiming on your taxes, you cannot earn more than $40,000. This can go up to $55,000 depending on your circumstances.

What Happens If My Adult Child and Grandchild Both Live with Me?

If both your adult child and grandchild live with you full-time, you can claim both of them as dependents. But, as with everything else with the IRS, there are rules and regulations.

In order to claim both of them on your taxes, your adult child must receive at least half of their income support from you. They must also earn less than $3,950 taxable income a year, even though social security doesn’t count toward this sum. Your adult child must not file jointly with another person.

If you claim your adult child as a dependent, and your grandchild also lives with you at least half of the year, you may claim your grandchild on your taxes. However, the child’s other parent must forfeit his or her right to claim the child before you can do so.

Are There Upper Age Limits?

When you claim your grandchild on your taxes, be mindful of upper age limits. The child cannot be older than 19. You can claim a grandchild up to the age of 24 if he or she is in full-time higher education.

A disabled grandchild who is fully dependent on you qualifies at any age. This rule also applies to your adult children.

What If I Take Care of a Young Person Who Is Not My Grandchild?

In some instances, you may qualify to claim a child who is not related to you or is a great-niece, great-nephew, or other non-direct relation.

In this case, the child must live with you 365 days of the year and be your dependent. Their parent must have also waived their right to claim them on their taxes.

Where Do I Claim My Grandchild?

Some people erroneously list their grandchild as their child on their tax forms. Instead, you must list your grandchild as your grandchild.

If the young person you are caring for is not your grandchild, you must list their relation to you.

The Bottom Line

The answer to the question “Can a grandparent claim a grandchild on taxes?” is yes, but you must do so with full respect to the IRS rules. Disregarding them may cause tax audits or further issues down the line. It is always best to not try and circumvent the rules and to do it right the first time.

Visit our blog for answers to many of the most common queries about state and federal taxes. We can also help with helping to get you out of tax debt.

Clinton F Wassor

Clinton F. Wasser, holding a Master of Science in Legal Studies of Taxation, brings a wealth of expertise in tax planning and compliance to his writing. With a career rooted in the workings of the tax landscape, Clinton navigates difficulties with finesse. Beyond his professional accomplishments, he generously volunteers his time to educate high school students about the nuances of taxes. As an author, Clinton marries his real-world experience with a passion for simplifying tax concepts. He has found that his technique empowers readers to better understand the world of taxation.
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