Feature Articles: Taxes
Grandparents Raising Grandchildren May Qualify for Tax Breaks
by Sherron Hancock, M.S., Consumer and Family Economics. Reviewed and adapted with special permission from the IRS by: Andrew Zumwalt, Personal Financial Planning, College of Human Environmental Sciences, University of Missouri Extension
Grandparents who have children living in their home may
be able to get extra money from the IRS. Both
grandparents and great grandparents can qualify. If the
grandparents qualify for the tax breaks, they will not
have to pay as much to Uncle Sam each year.
The Earned Income Tax Credit (EITC) is available
for low-income individuals and families. To receive this
EITC, you do not have to be raising children, but if you
are, you will get a bigger tax break.
You will get a refund from the IRS if your tax credit is
greater than the taxes you owe the government. To take
advantage of the EITC, you must work during the tax
year, and you must file a Federal tax return. There is
also a specific amount of money you must earn. For
details, see IRS publication 596 at
http://www.irs.gov/publications/p596/index.html or
see
http://missourifamilies.org/features/financearticles/EICfacts.htm
Grandparents can claim their grandchildren for an exemption if they meet the following criteria:
1. The child must be your son, daughter, stepchild,
foster child, brother, sister, half brother, half
sister, step sister, step brother, or a descendent of
any of them.
2. The child must be under age 19 at the end of the
year, under age 24 at the end of the year and a full
time student, or any age if permanently and totally
disabled.
3. The child must have lived with you for more than half
of the year.
4. The child must not have provided more than half of
his or her own support.
5. Finally, If the child meets the rules to be the
qualifying child of more than one person, you must be
the person entitled to claim the child as a qualifying
child.
Also, Grandparents may qualify for head of household
filing status if they pay the costs to maintain a
home lived in for over half the year by a qualifying
child (see exemption rules above) and were unmarried at
the end of the year.
As grandparents, you may also take advantage of the
Child Tax Credit, even if your family makes too much
money to be eligible for the EITC. To qualify, you must
1) owe taxes, 2) claim the child/children on the Federal
income tax return, and 3) the child/children must be
under the age of 17. For 2007 taxes, you may take a tax
credit of $1,000. for each child who qualifies.
Grandparents may also be eligible for a Child and Dependent Care Credit. This credit is to be used to pay for childcare so that grandparents can work or look for work. The amount of tax credit available depends on how many children you’re raising. Both amount of income and amount paid for child care will be used to determine the credit amount given. The refund can not exceed the taxes you owe.
Source: AARP (For persons 50+). Visit http://www.aarp.org.
 |
Site Administrator: |
|
|
|
Last update: Wednesday, March 12, 2008
