| On October 4, 2004, President Bush signed into law | | | | taxpayer or a descendant of any of these individuals. |
| the Working Families Tax Relief Act of 2004 (P.L. | | | | The term "child" includes son, daughter, stepson or |
| 108-311). The Act, according to the Joint Committee | | | | stepdaughter of the taxpayer, or an "eligible foster" |
| on Taxation, will cut taxes by some $146 billion over | | | | child of the taxpayer. |
| the next 10 years. | | | | Under this provision an adopted child or a child lawfully |
| There are many provisions in this Act which will assist | | | | placed with the taxpayer for adoption is treated as a |
| working families. This article will focus on only one | | | | child by blood and an "eligible foster" child is an |
| provision, the "uniform definition of a child." | | | | individual placed with the taxpayer by an authorized |
| The purpose of the provision was to simplify the tax | | | | placement agency or court. |
| code by adopting a uniform definition of a child for | | | | The member of household test requires that the |
| the dependency exemption, the child credit, the | | | | individual must have had the same principal place of |
| earned income credit (EIC), the dependent care | | | | abode as the taxpayer for more than half the tax |
| credit, and head-of-household filing status. | | | | year. |
| In general, under previous law a dependency | | | | Because the taxpayer no longer has to provide over |
| exemption was allowed if a taxpayer could show | | | | half of the support of an individual meeting the |
| that they met five basic tests. Under the new | | | | requirements to be a qualifying child, more than one |
| definition, a dependency exemption is allowed for an | | | | taxpayer could qualify to claim the individual as a |
| individual who would meet the requirements of, and | | | | dependent. |
| thus qualify as the taxpayer's "qualifying child" or | | | | If more than one taxpayer is entitled to and does |
| "qualifying relative." | | | | claim the individual as a dependent on the tax return, |
| There are some circumstances in which an otherwise | | | | there are provisions to determine which taxpayer will |
| qualifying individual (qualifying child or qualifying | | | | be allowed the dependency exemption. |
| relative) will not be considered a dependent in the | | | | If one of the taxpayers claiming the dependency is |
| following situations. The individual is a dependent of | | | | the individual's parent, then the parent will receive the |
| another taxpayer; therefore, that individual can have | | | | dependency exemption. |
| no dependents. The individual files a joint return, and | | | | If both parents are claiming the individual on separate |
| the individual is not a citizen or resident of the United | | | | returns, then the one with whom the individual |
| States or a country contiguous to the United States. | | | | resided the longest during the year will be entitled to |
| As a general rule, there are four tests which must be | | | | the exemption. |
| met in order to be considered a qualifying child | | | | If the individual resided for an equal amount of time |
| 1. Relationship | | | | with each, then the parent with the highest adjusted |
| 2. Member of household | | | | gross income will receive the exemption. |
| 3. Age | | | | If neither of the taxpayers are the individual's |
| 4. Self-support | | | | parents, then the one with the highest adjusted |
| The relationship test is met if the individual is a child | | | | gross income will be allowed the dependency. |
| of the taxpayer or a descendant of a child; or a | | | | This is a partial overview of the new Qualifying Child |
| brother, sister, stepbrother or stepsister of the | | | | rules. I hope this article has helped to clarify this rule. |