No Dependency Exemption for Grandmother Who Supported Grandchildren

Posted by Kim Chen on March 3rd, 2017

The taxpayer provided financial and household support to her grandchildren because their father (her son) was an unemployed drug addict. She claimed the grandchildren as dependents on her tax return after being assured by her son that he wouldn’t claim them. On audit, the taxpayer’s dependency exemptions for the grandchildren were disallowed because they had also been claimed on her son’s return. The Tax Court agreed that, however unfair, the taxpayer’s grandchildren were not “qualifying children” under the Section 152(c)(4) tie-breaker rule, which awards the qualifying child to the parent if two or more taxpayers claim the same child as a dependent. Therefore, the taxpayer couldn’t claim the children as dependents, wasn’t entitled to the earned income credit or child tax credits, and couldn’t file as head of household. Grisel A. Smyth, TC Memo 2017-29 (Tax Ct.).

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