@Hal_Al wrote:
@Opus 17 said "If your daughter files a tax return, she has the ABSOLUTE first right to claim her children as dependents and she can’t be claimed as a dependent by you in that situation".
From a practical standpoint, that's correct. Technically it's not correct.
I included that in my discussion above. If the daughter can be claimed, then she is supposed to check the box that says "I can be claimed as a dependent" even if she doesn't want to, and checking that box means she can't claim any dependents herself, so you would be free to claim all three persons as dependents on your tax return.
The problem is that if she does file a tax return and claim her children, and you also claim your daughter and grandchildren, the IRS will have to investigate both claims and ask both taxpayers to send proof. That puts you in the situation of fighting your child over money. True, it could be as much as $10,000 (once you add in the child tax credit and stimulus payments for 2 children age 5 or less), but the bad feelings from the fight might cost you for the rest of your life, more than mere money.
Good luck.
