@TC Squared wrote:
My daughter is not married and both she and my grandson live with me. My income is approx 40k-45k annually and hers roughly 15k-20k annually. Dad does not currently provide child support, but does have visitation, so I don't believe he is able to claim him.
As I stated before, the only way the father can claim the child (since he does not live in the same home as the child) is if the mother (your daughter) signs a waiver. Visitation, or even child support paid by the father, is completely irrelevant.
In your situation, there are three ways your family could file:
1. You claim your daughter and grandson as dependents. If you are unmarried (that's unclear) then you can file as head of household instead of single. The daughter files as single and claims no dependents.
2. You file single with no dependents. Your daughter files single and claims her son as a dependent. Your daughter can't file as head of household since she does not pay more than half the total household expenses.
3. You claim your grandson as a dependent but not your daughter. If you are unmarried, then you can file as head of household instead of single. The daughter files as single and claims no dependents. This is likely the worst combination, since your daughter will have to answer "yes, I can be claimed as a dependent by someone else" even if you don't claim her and she won't get certain tax benefits.
With #1, you will be able to claim the full $2000 child tax credit for your grandson plus the $500 other dependent credit for your daughter. Based on your income and claiming 2 dependents, you would also qualify for EITC, maybe $1000-$1500. Head of household also has lower tax rates than single.
With #2, you won't get any tax credits for dependents, and you will pay tax at the single rate (unless you are married filing jointly). Your daughter will claim close to the maximum $2000 child tax credit for her son, and will qualify for approximately $3300-$3700 of EITC.
It's going to be pretty close, which combination results in the largest benefit. You will need to test it out both ways when the 2023 software is available. You can use the turbotax TaxCaster to prepare estimates, it will use 2022 calculations but 2023 will be similar.
https://turbotax.intuit.com/tax-tools/calculators/taxcaster/
