There are several benefits associated with claiming a dependent child on your federal income tax return, including an exemption and several possible tax credits in the 2017 tax year. The Internal Revenue Service uses five tests to decide if a child qualifies to be claimed on a parent’s tax return: relationship, age, residency, support and joint return. Children who have full-time jobs or live away from home generally don’t pass these tests, but there are some exceptions for children who are serving in the military.
TL;DR (Too Long; Didn't Read)
If your son passes the qualifying child tests while in the military, you may be able to claim him as a dependent on your taxes.
IRS Relationship and Age Tests
The relationship test used for qualifying children says that a child must be your biological descendant, adopted or a foster child. Siblings, nieces and nephews are also allowed as dependents. The age test says that children must be younger than the taxpayer who claims them and age 19 or under at the end of the tax year, or under age 24 if a student. Dependent children who are permanently and totally disabled may be any age.
IRS Residency and Support Tests
The residency test for dependent children requires them to live with the taxpayer for more than half the year. There are several exceptions to this rule for children who are temporarily absent from the home. One of these exceptions is for military service. However, the support test states that a qualifying child must not provide more than half of his or her own financial support for the year. Your child who is serving in the military may pass the residency test while failing the support test.
IRS Joint Return Test
An additional test for a qualifying child on your return is that child does not file his or her own joint return with a spouse for the same year. For example, your 18-year-old daughter is in the military but lived with you for part of the year while her husband, also in military service, was stationed overseas. She and her husband filed a joint return, so you cannot claim her as your dependent.
Qualifying Child for More Than One Taxpayer
The IRS recognizes that there are circumstances when a child qualifies as a dependent for more than one taxpayer. This is a non-issue if the two taxpayers will file a joint tax return. For cases where the taxpayers will be filing separately, the IRS has created tiebreaker rules to determine who gets to claim the qualifying child. The focus of these rules is determining who the child spent the most time living with during the tax year. For complete details about qualifying children, see IRS Publication 501 - Exemptions, Standard Deduction, and Filing Information.
Qualifying Relative Tests
If your child is not a qualifying child due to age, there is a chance you could still claim them as a qualifying relative on your return if you provided more than half their support during the year. Your child does not have to live with you all year to be a qualifying relative, but they do need to have received financial support mainly from you rather than from their military job. See IRS Publication 501 for complete details.