The ‘Relationships Count’ Case

http://ustaxcourt.gov/InOpHistoric/DavilaSummary.SUM.WPD.pdf

The taxpayer claimed his cousin’s two minor children as dependents for head of household status, exemptions, child tax credit, and earned income credit even though they did not reside with him for the ENTIRE year.

Take aways:

• Unless the children bear one of the relationships to the taxpayer specified by code they must live with the taxpayer ALL year (among other criteria) in order to qualify dependents

• Note: Even when children qualify as dependents, CTC and EIC may be disallowed because the tests for these credits are different than the dependency tests