You cannot "let" your friend claim your kids if they do not qualify as his/her dependents. but, if they do qualify, he/she MAY claim them.
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. 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 (friend, boyfriend, fiance' & even cousin do not qualify) 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)
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.
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 the taxpayer ALL year
2. His/her gross taxable income for the year must be less than $4,000 (2015)
3. Taxpayer 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
In addition to the above requirements, to
claim a friend's children, they must meet all of the above requirements
and:
--- the friend must not be required
to file a return,
--- the friend does not file a return claiming the
children
