How do we best file to optimize our return

[gwmusick]

Our 30 year old divorced daughter and her two children (1yo,5yo) live in our second home, rent free.  She received $21,000 child support in 2018.  We further subsidize her family $52,000 in 2018.   She has no income and will not file nor be on someone else as a dependent How do I file?

(Texas) Thanks Gary

[gwmusick]

Sorry I forgot this.  We also spent $11,000 on private school for the oldest grandchild.  Thank Yous

[DanielV01]

It doesn't change things.  If the children lived in your house, you can claim them for the Child Tax Credit.  Since they do not, you cannot claim this credit.  There is a special arrangement through Form 8332 for the noncustodial parent to claim the credit, which I mention, but other relatives who could otherwise claim the Child Tax Credit if the child lives in the home with them cannot use this form.

[gwmusick]

great help.... bless you and thank you

[DanielV01]

You are welcome

[DanielV01]

It depends.  You may claim all three of them as dependents, but you will get limited benefits for doing so.  Since they do not live inside of your primary residence with you, you would only be able to claim them as qualifying relatives, which means the only benefit you may claim is the Other Dependent Credit of $500 each.  

If the father is a cooperative person, and is looking out for the interests of his children, your daughter may allow him to claim the two kids as qualifying children for the Child Tax Credit of $2000/child.  She would need to sign Form 8332 in order to allow this.  Even if she allows him to claim the two kids, you may still claim your daughter as a dependent.

[Bsch4477]

You can claim all of them as dependents.