Frequently Asked Questions: Who is a Qualifying Child for EITC and CTC/ACTC

 

Preparer Question  

 

IRS Answer  

Must I review the birth certificate to verify the age of a qualifying child?  

No, it's not required. However, if you have reason to question a child's age or relationship, you may want to request the birth certificate. If you use the information to determine eligibility for the child tax credit (CTC) or the earned income tax credit (EITC), you need to keep a copy with your records.

 

My client has a 23-year-old son who attends college. My client's wife is younger than his son is. Can my client claim his son as a qualifying child for EITC or the CTC?   If your client and his younger wife file a joint return and meet all other credit requirements, they can claim the son as a qualifying child. Either the taxpayer, or the spouse if filing a joint return, must be older than the individual claimed as a qualifying child. The son would not qualify the client for CTC because he is over 17 years old.
If a child works for minimal pay under a special program for individuals with disabilities, does IRS consider it "substantial gainful activity" under the definition of permanently and totally disabled?  

No, certain work offered to individuals with physical or mental disabilities is considered sheltered employment. The qualified locations are:

  • Sheltered workshops,
  • Hospitals and similar institutions,
  • Homebound programs
  • Department of Veterans Affairs (VA) sponsored homes.
My client says he has a 32-year-old son who lived with him all year in the U.S. and has a disability. I know the son worked part of the year and am not sure if the son is permanently and totally disabled. What documents would my client need to prove permanent and total disability?  

To prove permanent and total disability if your client is audited, the IRS asks for a letter from the child's doctor, other healthcare provider or any social service program or agency verifying the individual is permanently and totally disabled. Ask your client, if they have or can get a copy of this information. Your client should keep a copy of the letter with his tax information. 
 

If you do review the document and use it to determine if your client’s eligibility for the EITC or the amount of the credit, you need to keep a copy of the document.

 

IRS sends a Form 886-H-EIC with audit letters. The form is also available in Spanish. The forms have information on the documents the IRS accepts to prove the relationship, residency and age tests.

A woman takes care of her older sister who lives with her and receives Supplemental Security Income for a disability. No one else lives with them. Can the younger sister claim the older sister as her qualifying child?  

The older sister must meet the IRS definition of permanently and totally disabled:

 

  • Not being able to engage in any  substantial gainful activity because of a medically determinable physical or mental condition; and
  • A physician must certify the condition has lasted or is expected to last continuously for at least 12 months or result in death.

 

The age test for qualifying child is met by an individual of any age who is permanently and totally disabled.

If a college student stays in the college town to work during the summer break, can the child still pass the residency test?

 

 

The residency test is met if the child and the taxpayer had the same principal place of home for more than half of the tax year in the United States. The time attending school counts as a temporary absence if the child would have lived with your client if he or she would have lived with your client for the time the child was attending college.

 

This student is not a qualifying child for the CTC because the child is over the age of 17.

A household has a father who earned $11,000, the mother who didn't work outside the home, and a son, 16- years old who earned $12,000. The son did not save any of the money he earned. Instead, he spent his earnings on a car and clothing. The son did not pay any household expenses. The son is single and meets the age, relationship, residency, and joint return tests to be a qualifying child of his parents. The father and mother meet all the basic EITC qualifications and file a joint return. May the parents claim the son as a qualifying child for purposes of the EITC and the CTC? And, may the son claim a personal exemption for himself?

 

 

The son is a qualifying child of his parents for purposes of the EITC. There is no support test for the EITC.

 

Yes, he may claim a personal exemption for himself if he provides more than half his own support. If he claims, his own exemption, the parents may not claim him as a qualifying child for the CTC 

 

 

If my client’s child qualifies for purposes of the EITC, does that child qualify for purposes of the CTC?  

Not always. Many people who qualify for the EITC also qualify for the CTC/ACTC but here are the important differences:

  • For CTC, the qualifying child must be under age 17; the age limits for EITC are higher and there is no age limit for a child who is totally and permanently disabled
  • For EITC, the child must have a Social Security number that is valid for employment issued before the due date of the tax return (including extension) but a child with an ITIN may qualify for CTC but must meet the substantial presence test, Be admitted for lawful permanent residence or make a first year election (see Instructions for Schedule 8812 for more information)

Can a sworn statement or affidavit be used to prove the residency of a child?

 

 

During an examination, the IRS accepts letters on official letterhead from schools, medical providers, social service agencies, or places of worship that show the name of the child's parent or guardian, the child's address, and the dates the child lived with the taxpayer. The official letterhead is preferred since it is confirmation of the provider's identity. The address on the letter must match your client’s address for the tax year being audited.   And, the dates must cover more than half the tax year under audit  

 

See the Form 886-H-EIC for additional information. The form is also available in Spanish. The IRS sends this form with an audit notice. The forms have information on the documents the IRS accepts to prove the relationship, residency and age tests for claiming the EITC.

What is a foster child for EITC purposes? Some of my "clients" attempt to claim various children as a foster child or stepchild.

 

 

An eligible foster child is a child placed by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction.  An authorized placement agency includes a state or local government agency or an Indian tribal government. It also includes a tax-exempt organization licensed by a state or an Indian tribal government 

 

A step relationship formed by a legal marriage according to state law isn't dissolved by divorce or death. Treasury Regulations section 1.152-2(d) currently provides that "the relationship of affinity once existing will not terminate by divorce or the death of a spouse."

What type of documentation is the IRS going to ask to show relationship when an uncle or aunt is claiming his niece/nephew. 

 

 

The IRS will need to have copies of birth certificates marriage licenses or other official documents to show the relationship.

 

For example, if the aunt or uncle are blood relatives, he or she would need to send copies of:

  • the birth certificate of the niece or nephew showing the name of his or her brother or sister as the parent
  • the birth certificate of the child’s parent
  • his or her birth certificate showing the parent in common with his or her brother or sister

 

If the niece or nephew are by marriage, they would need to send a copy of the marriage certificate.

 

 There are more examples of documents the IRS will accept on the Form 886-H-EIC for more information. The form is also available in Spanish.

 

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Page Last Reviewed or Updated: 13-Apr-2017