Can a Grandparent Claim Grandchildren on Income Taxes?

Can a Grandparent Claim Grandchildren on Income Taxes?
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Can grandparents claim child tax credits? Yes, they can.

Grandparents can claim their grandchildren on their income taxes as dependents if they meet the dependency criteria and thus, enjoy some tax credits. For the tax year 2021, the American Rescue Plan Act of 2021 has made that possible.

And even when a child does not meet the qualifying child criteria, as a grandparent, you could claim your grandchildren as a dependent if they meet the qualifying relative criteria.

Can a Grandparent Claim a Child Over a Parent?

You can claim your grandchildren as dependents. When married but filing separate returns, you can claim them independently. But if you are filing joint returns, your spouse can also claim them on their tax returns. However, both of you can claim your grandchildren as dependents instead of their parents if you are responsible for their upbringing.

When Can a Grandparent Claim a Grandchild on Taxes?

Can a grandchild be a dependent? Yes, they could be. You can claim your grandchild on taxes as dependents if they are your qualifying child or relative. So, when is your grandchild a qualifying child?

To meet the qualifying child criteria, your grandchild must:

  • Be related to you by law or blood through birth, adoption or marriage.
  • Be younger than you (and your spouse if filing jointly), below the age of ​19​ or under ​24​ if they are a student.
  • Be permanently and totally disabled.
  • Be unclaimed by someone else as a dependent unless that person is your spouse with whom you are filing joint returns.
  • A U.S. national, citizen, resident alien or a resident of Canada or Mexico.
  • Live with you for at least half of the year unless there is an IRS-acceptable reason not to, such as kidnapping, military service and vacations.
  • Receive more than half of their support for the specified tax year from you.

To meet the relative criteria, your grandchild must:

  • Live in your household all year or be legally or blood-related to you.
  • Have earned less than ​$4,300​ as gross income for the tax year you want to claim that person as a dependent.
  • Have received at least ​50 percent​ of their support from you.
  • Be a U.S. resident alien or national, or resident of Mexico or Canada.

Why Should You Claim Your Grandchild on Taxes?

You should claim your grandchild on your taxes if you are helping raise them because you could receive several tax credits. Below are some of them.

1. Child Tax Credit

The child tax credit is available for families with children having Social Security numbers. For example, as a grandparent claiming your qualifying grandchildren, you could be eligible for ​$3,000​ per child if they are six years or older. Also, you could claim an additional ​$600​ if they are under six.

The child tax credit applies to all children under 17 years and is fully refundable even if you don’t owe any income taxes. But to be eligible for the child tax credit, you must have a maximum income ranging from ​$75,000 to $150,000​, depending on your filing status.

2. Child and Dependent Care Credit

You may also qualify for the child and dependent care credit if you spend money caring for your grandchildren and claim them on your taxes. The tax credit may be refundable and as much as $8,000 ​for one qualifying dependent or ​$16,000​ for two or more qualifying dependents.

To qualify for this credit, your gross-adjusted income must be less than ​$438,000​.

3. Earned Income Tax Credit (EITC)

Earned income tax credit is usually available to low- and middle-income workers. And you may qualify for it if you are raising your grandchildren, even if you are over 65 years old.

Your grandchild must meet the dependency and qualifying child criteria for you to be eligible for EITC. But you must have earned some income as an employee or from self-employment. And even if you don’t owe taxes, you must have filed a tax return.

If parents can claim their children on their taxes, so should you. So, don’t bother asking, “Can I claim grandchildren on my taxes?” Since you can, you should do so unashamedly. Raising grandchildren is not easy. And neither is it cheap. If you can claim tax credits for doing so by claiming them as dependents, do so.