Dependents

[Katbryck03]

I have legal guardianship appointed by the courts of my niece and nephew. They lived with me all year and I provided all of their financial support. Neither child any income. Can their parents claim them on their taxes? Their parents say they can or I can let them claim them, but it just doesn't seem right to me.

[KurtL1 · Accepted solution]

Because your niece and nephew lived with you the entire year, you are the only one that would be able to claim them on a return.

For the parents to claim the children, the children would have to have lived with the parents for over six months.

[Hal_Al · Accepted solution]

The parents can claim them (ahead of you), if the parents also lived with you for more than half the year. If the parents did not live with their children for more than half the year, they can not claim the kids, ahead of you (and most likely not at all).  That is, you couldn't even let them.

You can claim them, not because of the legal guardianship or even that you supported them. You can claim them because you are related and they live with you.

Read on for more details. 

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There are two types of dependents, "Qualifying Children"(QC) and standard ("Qualifying Relative" in IRS parlance even though they don't have to actually be related). There is no income limit for a QC but there is an age limit, student status, a relationship test and residence test. Only a QC qualifies a taxpayer for the Earned Income Credit and the Child Tax Credit. They are interrelated but the rules are different for each.

.A child closely related (aunt - uncle are) 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
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, if the child also lived with the parent more than half the year)
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 the child.

https://turbotax.intuit.com/tax-tools/tax-tips/Family/Rules-for-Claiming-a-Dependent-on-Your-Tax-Ret...