You can claim your grandson as a dependent. A child closely related to a taxpayer can be a “Qualifying Child (QC)” dependent, regardless of the child's income, if:
1. He is under age 19, or under 24 if a full time student for at least 5 months of the year, or is totally & permanently disabled
2. He did not provide more than 1/2 his own support. Note that the support test for a QC is not that you, the taxpayer, provided more than half his support; but only that he didn't provide more than half hiss own support. Welfare is third party support, and not considered support provided by the child.
3. He lived with the relative (including temporary absences) for more than half the year
4. He is younger than the relative (not applicable for a disabled child)
5. If the child meets the rules to be a qualifying child of more than one person, you must be the person entitled to claim the child as a qualifying child (this essentially means that you have the parent’s permission to claim the child)
6. If the parents of a child can claim the child as a qualifying child but no parent so claims the child, no one else can claim the child as a qualifying child unless that person's adjusted gross income (AGI) is higher than the highest AGI of any of the child's parents who can claim him.
Whether you can claim your son is not as clear. A person can still be a Qualifying
relative dependent, if not a Qualifying Child, if he meets the 6 tests for
claiming a dependent:
1. Closely Related OR live
with you ALL year
2. His/her gross taxable income for the year must be less than $4,000 (2015)
3. You must have provided
more than 1/2 his support
Welfare doesn't count as income, for the income test, but welfare money he spends on himself does count as support not provided by you, for
the support test. The IRS has a worksheet that
can be used to help with the support calculation. See: http://apps.irs.gov/app/vita/content/globalmedia/teacher/worksheet_for_determining_support_4012.pdf The support
value of a home is the fair market rental value, divided by the number of
occupants.
