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 and a requirement that they be a close blood relation. Only a
QC qualifies you for the Earned Income Credit (EIC) and the Child Tax Credit.
You may not claim the unrelated child, you get every other week, at all. (Unless you were married to his parent. A stepparent is the same as a parent for tax purposes, and the relationship survives the divorce).
You may only claim the blood child, you get every other week, if the other parent (the custodial parent) gives you permission on IRS form 8332. Then, you (the noncustodial parent) may claim his exemption and child tax credit. But, you may not claim him for EIC.
You may only claim your fiance's children if they lived with you all year and you provided more than half their support and their mother is not required to file a tax return. Even then, they cannot be QCs.
You may claim the new born as a QC, if he is born before year end and lives with you from birth to year end.
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FULL RULES
A child of a taxpayer can still be a “Qualifying Child” (QC) dependent, regardless of his/her 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. Scholarships are
considered third party support and not as support provided by the student.
3. He lived with the parent
(including temporary absences such as away at school or in the hospital) for more than half
the year
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 $4,050 (2016)
3. You must have provided
more than 1/2 his support
In either case:
4. He must be a US citizen or resident of the US, Canada
or Mexico
5. He must not file a joint
return with his spouse or be claiming a dependent of his own
6. He must not be the
qualifying child of another taxpayer
He must have a US social
security number or tax identification number (TIN)
In addition to the above requirements, to
claim your fiance's children, they must meet all of the above
requirements and:
--- your fiance must not be required
to file a return,
--- he/she does not file a return claiming the
children
The children may qualify as a
dependent, but because they are not related, he cannot be a qualifying child for
the earned income credit, child tax credit or Head of Household filing status.
