17 y/o with a child

[TC Squared]

My daughter is 17 yrs old and had a son in June. She also has a part time job. I provide all housing/food/transportation/etc for my daughter. She buys anything she wants (if she doesn't like what I buy), clothes and toiletries for herself and buys anything related to her newborn (clothes/diapers/formula/etc), for him I'm only really providing housing, child care (no cost associated) and transportation. Come tax season, would I claim her as my dependent and she claim him? Do I claim both? Am I even able to claim her?

[xmasbaby0]

Your daughter can be your qualifying child dependent if she is under the age of 19 at the end of 2023, and you are providing at least half of her support.

It is unlikely that a 17 year old with a part-time job is actually supporting herself and her child.   They live in your home, so the more likely scenario is that you can claim both of them as your dependents.  You do not mention whether you have income from working.   If so, then you are more likely to get the full amount of the refundable child tax credit if you claim the child as your dependent.   You cannot get the CTC for your daughter since she is older than 16, but you can get the $500 credit for other dependents for claiming her.   You *might* be eligible to get earned income credit for claiming your daughter and her child, depending on how much income you received from working.

If your daughter is younger than 19 at the end of 2023, then she can still be claimed as your qualifying child, as can your grandchild, no matter how much your daughter made at her part-time job.   

When tax time comes, you might want to prepare tax returns with your daughter claiming the baby and one with you claiming both of them to see which way it works out best; most likely it will come out the best with you claiming both of them.

IRS interview to help determine who can be claimed:

https://www.irs.gov/help/ita/who-can-i-claim-as-a-dependent

https://ttlc.intuit.com/questions/3113432-who-can-i-claim-as-my-dependent  

WHO CAN I CLAIM AS A DEPENDENT?

You can claim a child, relative, friend, or fiancé (etc.) as a dependent on your 2023 taxes as long as they meet the following requirements:

Qualifying child

• They're related to you.
• They aren't claimed as a dependent by someone else.
• They're a U.S. citizen, resident alien, national, or a Canadian or Mexican resident.
• They aren’t filing a joint return with their spouse.
• They're under the age of 19 (or 24 for full-time students).
• No age limit for permanently and totally disabled children.
• They lived with you for more than half the year (exceptions apply).
• They didn't provide more than half of their own support for the year.

Qualifying relative

• They don't have to be related to you (despite the name).
• They aren't claimed as a dependent by someone else.
• They're a U.S. citizen, resident alien, national, or a Canadian or Mexican resident.
• They aren’t filing a joint return with their spouse.
• They lived with you the entire year (exceptions apply).
• They made less than $4,700 in 2023.
• You provided more than half of their financial support.

When you add someone as a dependent, we'll ask a series of questions to make sure you can claim them. There may be other tax benefits you can get when you claim a dependent.

Related Information:

• What does "financially support another person" mean?
• What is a "qualifying person" for Head of Household?
• Does a dependent for 2023 have to live with me?
•  

Am I Head of Household?

https://ttlc.intuit.com/questions/1894553-do-i-qualify-for-head-of-household

https://ttlc.intuit.com/questions/2900097-what-is-a-qualifying-person-for-head-of-household

[Opus 17]

You haven't said where your child and grandchild live.  That is key.

My first comment is that if your daughter claims her son as a dependent, then you can't claim your daughter, regardless of any other factors we discuss.

My second comment is that you are probably allowed to claim your daughter as a dependent, even if she doesn't live with you, but we need to know more.  If she does live with you, you are probably also allowed to claim the grandson as your dependent, but only if the grandson lives with you in your home.

My third comment is that the father can't claim the grandson as a dependent unless either (1) the grandson lives in the same home as his father, or (2) your daughter signs a waiver.

My fourth comment is that, assuming that you are allowed to claim your daughter and grandson as dependents, you and your daughter would have to work together to see which method gives the largest refund or lowest tax.  You could claim a $500 dependent credit for your daughter and up to $2000 child tax credit for the grandson.  Your daughter, depending on how much she works, might be able to claim up to $1400 child tax credit for the child plus Earned Income Credit, which might be more than you would get.  It depends on your taxable income, your daughters' taxable income, whether you work or are retired, and other factors.  The only way to know for sure is to test it both ways.

For a more specific answer, we need to know where your daughter and granddaughter physically live, and and the approximate income earned from working by both you and your daughter (not counting pension, IRA, social security, investments, etc.)

[Opus 17]

@xmasbaby0 

Note that while the taxpayer said she provided housing for her daughter, she did not specify that the daughter lived with her in her home.  She might be paying for an apartment somewhere, with or without a boyfriend.  The daughter and grandchild can only be qualifying child dependents if they live in the same home as the mother. 

[xmasbaby0]

@Opus 17 You have a good point---I interpreted "I provide housing..." as the parent with the 17 year old living at home....but that could be a wrong assumption.  We do need further details which hopefully the OP will provide.

[Mike9241]

yuo could claim your daughter as a qualifying child if all thse tests are met

• she has the same principal abode as you for more than ½ the tax year. Temporary absences like for school are ignored. for newborns it's from date of birth including any stay in the hospital.
• if she is not a full-time student, she's under 19 at the end of the tax year. If a full-time student, she's under 24 at the end of the tax year.
• she hasn't provided over ½ her own support
• she didn't file a joint return unless there was no tax liability but merely filing joint to facilitate refund of taxes  paid in

IRS support test worksheet

https://apps.irs.gov/app/vita/content/globalmedia/teacher/worksheet_for_determining_support_4012.pdf 

if you can claim her, the rule is she can not claim her son as a dependent IRC 152(b)(1)

the same tests as above  would apply to her son for you to claim him

if you do not meet the tests to claim her then you can not claim the child becuase the parent has a higher prioity under the tax rules 

[rjs]

Everyone seems to be assuming that the daughter is not married, but the OP didn't say that. More information is needed.

• Is the daughter married to the baby's father?
• Is the daughter married to someone else?
• Where does the baby's father live?
• If the daughter and grandson live with the OP, who else lives in the same household?

[TC Squared]

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.

[Opus 17]

---

@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/