What’s New for 2005 Returns

Uniform Definition of a Qualifying Child

Continued from last week.

Dependency exemption, head of household filing status, and Earned Income Credit. For purposes of these tax benefits, a child must be under age 19 at the end of the year, or under age 24 at the end of 2005 if a student, or any age if permanently and totally disabled. A student is any child who, during any 5 months of the year was enrolled as a full-time student at a school, or took a full-time on-farm training course given by a school or a state, county, or local government agency. A school includes a technical, trade, or mechanical school. It does not include an on-the-job training course, correspondence school, or night school.

Child tax credit. For purposes of the child tax credit, child must be under the age of 17.

Credit for child and dependent care expenses. For purposes of the credit for child and dependent care expenses, a child must be under the age of 13 or any age if permanently and totally disabled. The child cannot have provided over half his or her own support during the year. For purposes of the Earned Income Credit only, the support test does not apply.

Dependency Exemption. To claim the dependency exemption for a qualifying child, all four tests discussed earlier must be met. The child generally must also be a U.S. citizen, U.S. national, or a resident of the United States, Canada, or Mexico. An exception applies for certain adopted children. If married, the child cannot file a joint return unless the return is filed only as a claim for refund and no tax liability would exist for either spouse if they had filed separate returns. A person who used to qualify as your dependent but who is not your “qualifying child” may still qualify as your dependent as a “qualifying relative.” To claim the dependency exemption for a qualifying relative, the person cannot be the qualifying child of any other person and all five dependency tests must be met. If you are a dependent of another person, you cannot claim any dependents on your return.

This column is offered as a public service with the understanding that each person's tax situation is different; and that you should consult your CPA before taking any action based upon comments made in this article. Call me and I will be happy to explain my CPA Quality tax preparation at “H&R Block Rates”.  I can be reached at 825-2771.