Bad Tax Advice!

Bad Tax Advice: “If it is not his daughter, and you’re not married, legally he cannot claim her!! 2 years ago when I was with my husband before we got married, he tried claiming my son as a dependent an HR Block would not allow him to do that”

This Well Meaning Internet Stranger ™ is actually closer to the truth than many people. The IRS recognizes two kinds of dependents: Qualifying CHILD and Qualifying RELATIVE. Interestingly, the “child” and “relative” portions of the titles are misleading. I can claim someone who isn’t my child as my Qualifying Child. I can claim someone who isn’t related to me at all as my Qualifying Relative. Conversely, there are times when my child (who I support) CANNOT be my Qualifying Child, and my relative (who I support) cannot be Qualifying Relative. Fun, right?

To find out who is what, you have to look at a set of tests. We usually start with Qualifying Child, because it’s a lot better to have one of those tax-wise. The tests are: relationship, age, residency, support and joint return. So, for the WMIS ™ above, let’s assume that she had a kid from a previous relationship (Kid), and is now living with, and being supported by, her boyfriend (Boyfriend). At tax time, Boyfriend wants to claim Kid, as he’s been supporting Kid, so we look at the rules for QC. First one is the relationship rule, which say Kid has to be related to you as your descendant (including relationships by marriage or adoption, like step child, foster child etc), your sibling, or the descendent of your sibling. BAM! Kicked out of QC status! Kid is not related to him. Of course, Boyfriend could change this, by marrying her, and/or adopting her kid. But he didn’t, so for this tax year, he CANNOT claim Kid as his Qualifying Child.

BUT…..can Kid still be his Qualifying Relative? YES! Guess who else he may be able to claim? Kid’s mom! Did they live in the same house all year? Did Boyfriend provide more than half of the support for Girlfriend and Kid? Did Girlfriend (or Kid) have gross income for the year of less than $3,950? Then it’s very likely that both Kid and Girlfriend will qualify to be Boyfriend’s Qualifying Relatives. Having Qualifying Relatives won’t get him Head of Household status, and won’t qualify him for Earned Income Credit (unless he would qualify without any dependents due to income under ~$14,000). But if Boyfriend is in the 15% tax bracket, the estimated cost of following Bad Tax Advice could be around $1,200 Federally and $800 for Oregon.