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1040ez 2011 Online

1040ez 2011 online 10. 1040ez 2011 online   Business Bad Debts Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Definition of Business Bad DebtAccrual method. 1040ez 2011 online Cash method. 1040ez 2011 online Debt acquired from a decedent. 1040ez 2011 online Liquidation. 1040ez 2011 online Types of Business Bad Debts When a Debt Becomes Worthless How To Claim a Business Bad DebtSpecific Charge-Off Method Nonaccrual-Experience Method Recovery of a Bad DebtNet operating loss (NOL) carryover. 1040ez 2011 online Introduction You have a bad debt if you cannot collect money owed to you. 1040ez 2011 online A bad debt is either a business bad debt or a nonbusiness bad debt. 1040ez 2011 online This chapter discusses only business bad debts. 1040ez 2011 online Generally, a business bad debt is one that comes from operating your trade or business. 1040ez 2011 online You can deduct business bad debts on Schedule C (Form 1040) or your applicable business income tax return. 1040ez 2011 online All other bad debts are nonbusiness bad debts and are deductible only as short-term capital losses. 1040ez 2011 online For more information on nonbusiness bad debts, see Publication 550. 1040ez 2011 online Topics - This chapter discusses: Definition of business bad debt When a debt becomes worthless How to claim a business bad debt Recovery of a bad debt Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 536 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses 556 Examination of Returns, Appeal Rights, and Claims for Refund Form (and Instructions) Schedule C (Form 1040) Profit or Loss From Business 1040X Amended U. 1040ez 2011 online S. 1040ez 2011 online Individual Income Tax Return 1045 Application for Tentative Refund 1139 Corporation Application for Tentative Refund 3115 Application for Change in Accounting Method See chapter 12 for information about getting publications and forms. 1040ez 2011 online Definition of Business Bad Debt A business bad debt is a loss from the worthlessness of a debt that was either: Created or acquired in your trade or business, or Closely related to your trade or business when it became partly or totally worthless. 1040ez 2011 online A debt is closely related to your trade or business if your primary motive for incurring the debt is business related. 1040ez 2011 online Bad debts of a corporation (other than an S corporation) are always business bad debts. 1040ez 2011 online Credit sales. 1040ez 2011 online   Business bad debts are mainly the result of credit sales to customers. 1040ez 2011 online Goods that have been sold, but not yet paid for, and services that have been performed, but not yet paid for, are recorded in your books as either accounts receivable or notes receivable. 1040ez 2011 online After a reasonable period of time, if you have tried to collect the amount due, but are unable to do so, the uncollectible part becomes a business bad debt. 1040ez 2011 online   Accounts or notes receivable valued at fair market value (FMV) when received are deductible only at that value, even though the FMV may be less than the face value. 1040ez 2011 online If you purchased an account receivable for less than its face value, and the receivable subsequently becomes worthless, the most you are allowed to deduct is the amount you paid to acquire it. 1040ez 2011 online    You can claim a business bad debt deduction only if the amount owed to you was previously included in gross income. 1040ez 2011 online This applies to amounts owed to you from all sources of taxable income, including sales, services, rents, and interest. 1040ez 2011 online Accrual method. 1040ez 2011 online   If you use the accrual method of accounting, you generally report income as you earn it. 1040ez 2011 online You can only claim a bad debt deduction for an uncollectible receivable if you have previously included the uncollectible amount in income. 1040ez 2011 online   If you qualify, you can use the nonaccrual-experience method of accounting discussed later. 1040ez 2011 online Under this method, you do not have to accrue income that, based on your experience, you do not expect to collect. 1040ez 2011 online Cash method. 1040ez 2011 online   If you use the cash method of accounting, you generally report income when you receive payment. 1040ez 2011 online You cannot claim a bad debt deduction for amounts owed to you because you never included those amounts in income. 1040ez 2011 online For example, a cash basis architect cannot claim a bad debt deduction if a client fails to pay the bill because the architect's fee was never included in income. 1040ez 2011 online Debts from a former business. 1040ez 2011 online   If you sell your business but retain its receivables, these debts are business debts because they arose out of your trade or business. 1040ez 2011 online If any of these receivables subsequently become worthless, the loss is still a business bad debt. 1040ez 2011 online Debt acquired from a decedent. 1040ez 2011 online   The character of a loss from debts of a business acquired from a decedent is determined in the same way as debts acquired on the purchase of a business. 1040ez 2011 online The executor of the decedent's estate treats any loss from the debts as a business bad debt if the debts were closely related to the decedent's trade or business when they became worthless. 1040ez 2011 online Otherwise, a loss from these debts becomes a nonbusiness bad debt for the decedent's estate. 1040ez 2011 online Liquidation. 1040ez 2011 online   If you liquidate your business and some of the accounts receivable that you retain become worthless, they become business bad debts. 1040ez 2011 online Types of Business Bad Debts Business bad debts may result from the following. 1040ez 2011 online Loans to clients and suppliers. 1040ez 2011 online   If you loan money to a client, supplier, employee, or distributor for a business reason and you are unable to collect the loan after attempting to do so, you have a business bad debt. 1040ez 2011 online Debts owed by political parties. 1040ez 2011 online   If a political party (or other organization that accepts contributions or spends money to influence elections) owes you money and the debt becomes worthless, you can claim a bad debt deduction only if all of the following requirements are met. 1040ez 2011 online You use the accrual method of accounting. 1040ez 2011 online The debt arose from the sale of goods or services in the ordinary course of your trade or business. 1040ez 2011 online More than 30% of your receivables accrued in the year of the sale were from sales to political parties. 1040ez 2011 online You made substantial and continuing efforts to collect on the debt. 1040ez 2011 online Loan or capital contribution. 1040ez 2011 online   You cannot claim a bad debt deduction for a loan you made to a corporation if, based on the facts and circumstances, the loan is actually a contribution to capital. 1040ez 2011 online Debts of an insolvent partner. 1040ez 2011 online   If your business partnership breaks up and one of your former partners becomes insolvent, you may have to pay more than your pro rata share of the partnership's debts. 1040ez 2011 online If you pay any part of the insolvent partner's share of the debts, you can claim a bad debt deduction for the amount you paid that is attributable to the insolvent partner's share. 1040ez 2011 online Business loan guarantee. 1040ez 2011 online   If you guarantee a debt that subsequently becomes worthless, the debt can qualify as a business bad debt if all the following requirements are met. 1040ez 2011 online You made the guarantee in the course of your trade or business. 1040ez 2011 online You have a legal duty to pay the debt. 1040ez 2011 online You made the guarantee before the debt became worthless. 1040ez 2011 online You meet this requirement if you reasonably expected you would not have to pay the debt without full reimbursement from the borrower. 1040ez 2011 online You received reasonable consideration for making the guarantee. 1040ez 2011 online You meet this requirement if you made the guarantee in accord with normal business practice or for a good faith business purpose. 1040ez 2011 online Example. 1040ez 2011 online Jane Zayne owns the Zayne Dress Company. 1040ez 2011 online She guaranteed payment of a $20,000 note for Elegant Fashions, a dress outlet. 1040ez 2011 online Elegant Fashions is one of Zayne's largest clients. 1040ez 2011 online Elegant Fashions later defaulted on the loan. 1040ez 2011 online As a result, Ms. 1040ez 2011 online Zayne paid the remaining balance of the loan in full to the bank. 1040ez 2011 online She can claim a business bad debt deduction only for the amount she paid, since her guarantee was made in the course of her trade or business for a good faith business purpose. 1040ez 2011 online She was motivated by the desire to retain one of her better clients and keep a sales outlet. 1040ez 2011 online Deductible in the year paid. 1040ez 2011 online   If you make a payment on a loan you guaranteed, you can deduct it in the year paid, unless you have rights against the borrower. 1040ez 2011 online Rights against a borrower. 1040ez 2011 online   When you make payment on a loan you guaranteed, you may have the right to take the place of the lender. 1040ez 2011 online The debt is then owed to you. 1040ez 2011 online If you have this right, or some other right to demand payment from the borrower, you cannot claim a bad debt deduction until these rights become partly or totally worthless. 1040ez 2011 online Joint debtor. 1040ez 2011 online   If two or more debtors jointly owe you money, your inability to collect from one does not enable you to deduct a proportionate amount as a bad debt. 1040ez 2011 online Sale of mortgaged property. 1040ez 2011 online   If mortgaged or pledged property is sold for less than the debt, the unpaid, uncollectible balance of the debt is a bad debt. 1040ez 2011 online When a Debt Becomes Worthless A debt becomes worthless when there is no longer any chance the amount owed will be paid. 1040ez 2011 online This may occur when the debt is due or prior to that date. 1040ez 2011 online To demonstrate worthlessness, you must only show that you have taken reasonable steps to collect the debt but were unable to do so. 1040ez 2011 online It is not necessary to go to court if you can show that a judgment from the court would be uncollectible. 1040ez 2011 online Bankruptcy of your debtor is generally good evidence of the worthlessness of at least a part of an unsecured and unpreferred debt. 1040ez 2011 online Property received for debt. 1040ez 2011 online   If you receive property in partial settlement of a debt, reduce the debt by the property's FMV, which becomes the property's basis. 1040ez 2011 online You can deduct the remaining debt as a bad debt if and when it becomes worthless. 1040ez 2011 online   If you later sell the property for more than its basis, any gain on the sale is due to the appreciation of the property. 1040ez 2011 online It is not a recovery of a bad debt. 1040ez 2011 online For information on the sale of an asset, see Publication 544. 1040ez 2011 online How To Claim a Business Bad Debt There are two methods to claim a business bad debt. 1040ez 2011 online The specific charge-off method. 1040ez 2011 online The nonaccrual-experience method. 1040ez 2011 online Generally, you must use the specific charge-off method. 1040ez 2011 online However, you may use the nonaccrual-experience method if you meet the requirements discussed later under Nonaccrual-Experience Method . 1040ez 2011 online Specific Charge-Off Method If you use the specific charge-off method, you can deduct specific business bad debts that become either partly or totally worthless during the tax year. 1040ez 2011 online However, with respect to partly worthless bad debts, your deduction is limited to the amount you charged off on your books during the year. 1040ez 2011 online Partly worthless debts. 1040ez 2011 online   You can deduct specific bad debts that become partly uncollectible during the tax year. 1040ez 2011 online Your tax deduction is limited to the amount you charge off on your books during the year. 1040ez 2011 online You do not have to charge off and deduct your partly worthless debts annually. 1040ez 2011 online You can delay the charge off until a later year. 1040ez 2011 online However, you cannot deduct any part of a debt after the year it becomes totally worthless. 1040ez 2011 online Significantly modified debt. 1040ez 2011 online   An exception to the charge-off rule exists for debt which has been significantly modified and on which the holder recognized gain. 1040ez 2011 online For more information, see Regulations section 1. 1040ez 2011 online 166-3(a)(3). 1040ez 2011 online Deduction disallowed. 1040ez 2011 online   Generally, you can claim a partial bad debt deduction only in the year you make the charge-off on your books. 1040ez 2011 online If, under audit, the IRS does not allow your deduction and the debt becomes partly worthless in a later tax year, you can deduct the amount you charged off in that year plus the disallowed amount charged off in the earlier year. 1040ez 2011 online The charge-off in the earlier year, unless reversed on your books, fulfills the charge-off requirement for the later year. 1040ez 2011 online Totally worthless debts. 1040ez 2011 online   If a debt becomes totally worthless in the current tax year, you can deduct the entire amount, less any amount deducted in an earlier tax year when the debt was only partly worthless. 1040ez 2011 online   You do not have to make an actual charge-off on your books to claim a bad debt deduction for a totally worthless debt. 1040ez 2011 online However, you may want to do so. 1040ez 2011 online If you do not and the IRS later rules the debt is only partly worthless, you will not be allowed a deduction for the debt in that tax year because a deduction of a partly worthless bad debt is limited to the amount actually charged off. 1040ez 2011 online See Partly worthless debts, earlier. 1040ez 2011 online Filing a claim for refund. 1040ez 2011 online   If you did not deduct a bad debt on your original return for the year it became worthless, you can file a claim for a credit or refund. 1040ez 2011 online If the bad debt was totally worthless, you must file the claim by the later of the following dates. 1040ez 2011 online 7 years from the date your original return was due (not including extensions). 1040ez 2011 online 2 years from the date you paid the tax. 1040ez 2011 online   If the claim is for a partly worthless bad debt, you must file the claim by the later of the following dates. 1040ez 2011 online 3 years from the date you filed your original return. 1040ez 2011 online 2 years from the date you paid the tax. 1040ez 2011 online You may have longer to file the claim if you were unable to manage your financial affairs due to a physical or mental impairment. 1040ez 2011 online Such an impairment requires proof of existence. 1040ez 2011 online   For details and more information about filing a claim, see Publication 556. 1040ez 2011 online Use one of the following forms to file a claim. 1040ez 2011 online For more information, see the instructions for the applicable form. 1040ez 2011 online Table 10-1. 1040ez 2011 online Forms Used To File a Claim IF you filed as a. 1040ez 2011 online . 1040ez 2011 online . 1040ez 2011 online THEN file. 1040ez 2011 online . 1040ez 2011 online . 1040ez 2011 online Sole proprietor or farmer Form 1040X Corporation Form 1120X S corporation Form 1120S and check box H(4) Partnership Form 1065X if filing on paper or  Form 1065 and check box G(5) if filing electronically Nonaccrual-Experience Method If you use an accrual method of accounting and qualify under the rules explained in this section, you can use the nonaccrual-experience method for bad debts. 1040ez 2011 online Under this method, you do not accrue service related income you expect to be uncollectible. 1040ez 2011 online Because the expected uncollectible amounts are not included in income, these amounts are not later deducted from income. 1040ez 2011 online Generally, you can use the nonaccrual-experience method for accounts receivable for services you performed only if: The services are provided in the fields of accounting, actuarial science, architecture, consulting, engineering, health, law, or the performing arts, or You meet the $5 million gross receipts test for all prior years. 1040ez 2011 online Service related income. 1040ez 2011 online   You can use the nonaccrual-experience method only for amounts earned by performing services. 1040ez 2011 online You cannot use this method for amounts owed to you from activities such as lending money, selling goods, or acquiring receivables or other rights to receive payment. 1040ez 2011 online Gross receipts test. 1040ez 2011 online   To find out if you meet the $5 million gross receipts test for all prior years, you must figure the average annual gross receipts for each prior year. 1040ez 2011 online If your average annual gross receipts for any year exceeds $5 million, you cannot use the non-accural experience method. 1040ez 2011 online   The average annual gross receipts for any year is the average of gross receipts from the year in question and the 2 previous years. 1040ez 2011 online For example, if you were figuring the average annual gross receipts for 2013, you would average your gross receipts for 2011, 2012, and 2013. 1040ez 2011 online Interest or penalty charged. 1040ez 2011 online   Generally, you cannot use the nonaccrual-experience method for amounts due on which you charge interest or a late payment penalty. 1040ez 2011 online However, do not treat a discount offered for early payment as the charging of interest or a penalty if both the following apply. 1040ez 2011 online You otherwise accrue the full amount due as gross income at the time you provide the services. 1040ez 2011 online You treat the discount allowed for early payment as an adjustment to gross income in the year of payment. 1040ez 2011 online Change in accounting method. 1040ez 2011 online   Generally, you must obtain consent to change to a nonaccrual-experience method (other than one of the safe harbor methods) or to change from one method to another. 1040ez 2011 online See Form 3115 and the Instructions for Form 3115 for more information. 1040ez 2011 online Recovery of a Bad Debt If you claim a deduction for a bad debt on your income tax return and later recover (collect) all or part of it, you may have to include all or part of the recovery in gross income. 1040ez 2011 online The amount you include is limited to the amount you actually deducted. 1040ez 2011 online However, you can exclude the amount deducted that did not reduce your tax. 1040ez 2011 online Report the recovery as “Other income” on the appropriate business form or schedule. 1040ez 2011 online See Recoveries in Publication 525 for more information. 1040ez 2011 online Net operating loss (NOL) carryover. 1040ez 2011 online   If a bad debt deduction increases an NOL carryover that has not expired before the beginning of the tax year in which the recovery takes place, you treat the deduction as having reduced your tax. 1040ez 2011 online A bad debt deduction that contributes to a NOL helps lower taxes in the year to which you carry the NOL. 1040ez 2011 online For more information about NOLs, see Publication 536. 1040ez 2011 online Also, see the Instructions for Form 1045, and the Instructions for Form 1139. 1040ez 2011 online Prev  Up  Next   Home   More Online Publications
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Tax Relief for Victims of May 25 Flooding in Iowa

MIL-2011-07, Oct. 19, 2011

MILWAUKEE — Victims of the flooding that began on May 25, 2011 in parts of Iowa may qualify for tax relief from the Internal Revenue Service.

The President has declared the following counties a federal disaster area: Fremont, Harrison, Mills, Monona and Pottawattamie. Individuals who reside or have a business in these counties may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after May 25, and on or before Aug. 1, have been postponed to Aug. 1, 2011.
In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after May 25, and on or before June 9, as long as the deposits are made by June 9, 2011.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request this tax relief.

Covered Disaster Area

The counties listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until Aug. 1 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after May 25 and on or before Aug. 1.

The IRS also gives affected taxpayers until Aug. 1 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after May 25 and on or before Aug. 1.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after May 25 and on or before June 9 provided the taxpayer makes these deposits by June 9.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “Iowa/Flooding” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from the official IRS website, irs.gov, or order them by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040.

Related Information

Page Last Reviewed or Updated: 13-Mar-2014

The 1040ez 2011 Online

1040ez 2011 online 3. 1040ez 2011 online   Personal Exemptions and Dependents Table of Contents What's New Introduction Useful Items - You may want to see: ExemptionsPersonal Exemptions Exemptions for Dependents Qualifying Child Qualifying Relative Phaseout of Exemptions Social Security Numbers for DependentsBorn and died in 2013. 1040ez 2011 online Taxpayer identification numbers for aliens. 1040ez 2011 online Taxpayer identification numbers for adoptees. 1040ez 2011 online What's New Exemption amount. 1040ez 2011 online  The amount you can deduct for each exemption has increased. 1040ez 2011 online It was $3,800 for 2012. 1040ez 2011 online It is $3,900 for 2013. 1040ez 2011 online Exemption phaseout. 1040ez 2011 online  You lose at least part of the benefit of your exemptions if your adjusted gross income is more than a certain amount. 1040ez 2011 online For 2013, this amount is $150,000 for a married individual filing a separate return; $250,000 for a single individual; $275,000 for a head of household; and $300,000 for married individuals filing jointly or a qualifying widow(er). 1040ez 2011 online See Phaseout of Exemptions , later. 1040ez 2011 online Introduction This chapter discusses the following topics. 1040ez 2011 online Personal exemptions — You generally can take one for yourself and, if you are married, one for your spouse. 1040ez 2011 online Exemptions for dependents — You generally can take an exemption for each of your dependents. 1040ez 2011 online A dependent is your qualifying child or qualifying relative. 1040ez 2011 online If you are entitled to claim an exemption for a dependent, that dependent cannot claim a personal exemption on his or her own tax return. 1040ez 2011 online Phaseout of exemptions — Your deduction is reduced if your adjusted gross income is more than a certain amount. 1040ez 2011 online Social security number (SSN) requirement for dependents — You must list the SSN of any dependent for whom you claim an exemption. 1040ez 2011 online Deduction. 1040ez 2011 online   Exemptions reduce your taxable income. 1040ez 2011 online You can deduct $3,900 for each exemption you claim in 2013. 1040ez 2011 online But you may lose at least part of the dollar amount of your exemptions if your adjusted gross income is more than a certain amount. 1040ez 2011 online See Phaseout of Exemptions , later. 1040ez 2011 online How to claim exemptions. 1040ez 2011 online    How you claim an exemption on your tax return depends on which form you file. 1040ez 2011 online    If you file Form 1040EZ, the exemption amount is combined with the standard deduction amount and entered on line 5. 1040ez 2011 online    If you file Form 1040A, complete lines 6a through 6d. 1040ez 2011 online The total number of exemptions you can claim is the total in the box on line 6d. 1040ez 2011 online Also complete line 26. 1040ez 2011 online   If you file Form 1040, complete lines 6a through 6d. 1040ez 2011 online The total number of exemptions you can claim is the total in the box on line 6d. 1040ez 2011 online Also complete line 42. 1040ez 2011 online Useful Items - You may want to see: Publication 501 Exemptions, Standard Deduction, and Filing Information Form (and Instructions) 2120 Multiple Support Declaration 8332 Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent Exemptions There are two types of exemptions you may be able to take: Personal exemptions for yourself and your spouse, and Exemptions for dependents (dependency exemptions). 1040ez 2011 online While each is worth the same amount ($3,900 for 2013), different rules apply to each type. 1040ez 2011 online Personal Exemptions You are generally allowed one exemption for yourself. 1040ez 2011 online If you are married, you may be allowed one exemption for your spouse. 1040ez 2011 online These are called personal exemptions. 1040ez 2011 online Your Own Exemption You can take one exemption for yourself unless you can be claimed as a dependent by another taxpayer. 1040ez 2011 online If another taxpayer is entitled to claim you as a dependent, you cannot take an exemption for yourself even if the other taxpayer does not actually claim you as a dependent. 1040ez 2011 online Your Spouse's Exemption Your spouse is never considered your dependent. 1040ez 2011 online Joint return. 1040ez 2011 online   On a joint return you can claim one exemption for yourself and one for your spouse. 1040ez 2011 online Separate return. 1040ez 2011 online   If you file a separate return, you can claim an exemption for your spouse only if your spouse had no gross income, is not filing a return, and was not the dependent of another taxpayer. 1040ez 2011 online This is true even if the other taxpayer does not actually claim your spouse as a dependent. 1040ez 2011 online You can claim an exemption for your spouse even if he or she is a nonresident alien; in that case, your spouse must have no gross income for U. 1040ez 2011 online S. 1040ez 2011 online tax purposes, must not be filing a return, and must not be the dependent of another taxpayer. 1040ez 2011 online Death of spouse. 1040ez 2011 online   If your spouse died during the year and you file a joint return for yourself and your deceased spouse, you generally can claim your spouse's exemption under the rules just explained in Joint return . 1040ez 2011 online If you file a separate return for the year, you may be able to claim your spouse's exemption under the rules just described in Separate return . 1040ez 2011 online   If you remarried during the year, you cannot take an exemption for your deceased spouse. 1040ez 2011 online   If you are a surviving spouse without gross income and you remarry in the year your spouse died, you can be claimed as an exemption on both the final separate return of your deceased spouse and the separate return of your new spouse for that year. 1040ez 2011 online If you file a joint return with your new spouse, you can be claimed as an exemption only on that return. 1040ez 2011 online Divorced or separated spouse. 1040ez 2011 online   If you obtained a final decree of divorce or separate maintenance during the year, you cannot take your former spouse's exemption. 1040ez 2011 online This rule applies even if you provided all of your former spouse's support. 1040ez 2011 online Exemptions for Dependents You are allowed one exemption for each person you can claim as a dependent. 1040ez 2011 online You can claim an exemption for a dependent even if your dependent files a return. 1040ez 2011 online The term “dependent” means: A qualifying child, or A qualifying relative. 1040ez 2011 online The terms “ qualifying child ” and “ qualifying relative ” are defined later. 1040ez 2011 online You can claim an exemption for a qualifying child or qualifying relative only if these three tests are met. 1040ez 2011 online Dependent taxpayer test. 1040ez 2011 online Joint return test. 1040ez 2011 online Citizen or resident test. 1040ez 2011 online These three tests are explained in detail later. 1040ez 2011 online All the requirements for claiming an exemption for a dependent are summarized in Table 3-1. 1040ez 2011 online Table 3-1. 1040ez 2011 online Overview of the Rules for Claiming an Exemption for a Dependent Caution. 1040ez 2011 online This table is only an overview of the rules. 1040ez 2011 online For details, see the rest of this chapter. 1040ez 2011 online You cannot claim any dependents if you (or your spouse, if filing jointly) could be claimed as a dependent by another taxpayer. 1040ez 2011 online   You cannot claim a married person who files a joint return as a dependent unless that joint return is filed only to claim a refund of withheld income tax or estimated tax paid. 1040ez 2011 online   You cannot claim a person as a dependent unless that person is a U. 1040ez 2011 online S. 1040ez 2011 online citizen, U. 1040ez 2011 online S. 1040ez 2011 online resident alien, U. 1040ez 2011 online S. 1040ez 2011 online national, or a resident of Canada or Mexico. 1040ez 2011 online 1  You cannot claim a person as a dependent unless that person is your qualifying child or qualifying relative. 1040ez 2011 online   Tests To Be a Qualifying Child   Tests To Be a Qualifying Relative The child must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them. 1040ez 2011 online   The child must be (a) under age 19 at the end of the year and younger than you (or your spouse, if filing jointly), (b) under age 24 at the end of the year, a student, and younger than you (or your spouse, if filing jointly), or (c) any age if permanently and totally disabled. 1040ez 2011 online   The child must have lived with you for more than half of the year. 1040ez 2011 online 2  The child must not have provided more than half of his or her own support for the year. 1040ez 2011 online   The child is not filing a joint return for the year (unless that return is filed only to get a refund of income tax withheld or estimated tax paid). 1040ez 2011 online  If the child meets the rules to be a qualifying child of more than one person, only one person can actually treat the child as a qualifying child. 1040ez 2011 online See the Special Rule for Qualifying Child of More Than One Person to find out which person is the person entitled to claim the child as a qualifying child. 1040ez 2011 online   The person cannot be your qualifying child or the qualifying child of any other taxpayer. 1040ez 2011 online   The person either (a) must be related to you in one of the ways listed under Relatives who do not have to live with you , or (b) must live with you all year as a member of your household2 (and your relationship must not violate local law). 1040ez 2011 online   The person's gross income for the year must be less than $3,900. 1040ez 2011 online 3  You must provide more than half of the person's total support for the year. 1040ez 2011 online 4  1There is an exception for certain adopted children. 1040ez 2011 online 2There are exceptions for temporary absences, children who were born or died during the year, children of divorced or separated parents (or parents who live apart), and kidnapped children. 1040ez 2011 online 3There is an exception if the person is disabled and has income from a sheltered workshop. 1040ez 2011 online 4There are exceptions for multiple support agreements, children of divorced or separated parents (or parents who live apart), and kidnapped children. 1040ez 2011 online Dependent not allowed a personal exemption. 1040ez 2011 online If you can claim an exemption for your dependent, the dependent cannot claim his or her own personal exemption on his or her own tax return. 1040ez 2011 online This is true even if you do not claim the dependent's exemption on your return. 1040ez 2011 online It is also true if the dependent's exemption on your return is reduced or eliminated under the phaseout rule described under Phaseout of Exemptions, later. 1040ez 2011 online Housekeepers, maids, or servants. 1040ez 2011 online   If these people work for you, you cannot claim exemptions for them. 1040ez 2011 online Child tax credit. 1040ez 2011 online   You may be entitled to a child tax credit for each qualifying child who was under age 17 at the end of the year if you claimed an exemption for that child. 1040ez 2011 online For more information, see chapter 34. 1040ez 2011 online Dependent Taxpayer Test If you can be claimed as a dependent by another person, you cannot claim anyone else as a dependent. 1040ez 2011 online Even if you have a qualifying child or qualifying relative, you cannot claim that person as a dependent. 1040ez 2011 online If you are filing a joint return and your spouse can be claimed as a dependent by someone else, you and your spouse cannot claim any dependents on your joint return. 1040ez 2011 online Joint Return Test You generally cannot claim a married person as a dependent if he or she files a joint return. 1040ez 2011 online Exception. 1040ez 2011 online   You can claim an exemption for a person who files a joint return if that person and his or her spouse file the joint return only to claim a refund of income tax withheld or estimated tax paid. 1040ez 2011 online Example 1—child files joint return. 1040ez 2011 online You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. 1040ez 2011 online He earned $25,000 for the year. 1040ez 2011 online The couple files a joint return. 1040ez 2011 online You cannot take an exemption for your daughter. 1040ez 2011 online Example 2—child files joint return only as claim for refund of withheld tax. 1040ez 2011 online Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. 1040ez 2011 online Neither is required to file a tax return. 1040ez 2011 online They do not have a child. 1040ez 2011 online Taxes were taken out of their pay so they filed a joint return only to get a refund of the withheld taxes. 1040ez 2011 online The exception to the joint return test applies, so you are not disqualified from claiming an exemption for each of them just because they file a joint return. 1040ez 2011 online You can claim exemptions for each of them if all the other tests to do so are met. 1040ez 2011 online Example 3—child files joint return to claim American opportunity credit. 1040ez 2011 online The facts are the same as in Example 2 except no taxes were taken out of your son's pay. 1040ez 2011 online He and his wife are not required to file a tax return. 1040ez 2011 online However, they file a joint return to claim an American opportunity credit of $124 and get a refund of that amount. 1040ez 2011 online Because claiming the American opportunity credit is their reason for filing the return, they are not filing it only to get a refund of income tax withheld or estimated tax paid. 1040ez 2011 online The exception to the joint return test does not apply, so you cannot claim an exemption for either of them. 1040ez 2011 online Citizen or Resident Test You cannot claim a person as a dependent unless that person is a U. 1040ez 2011 online S. 1040ez 2011 online citizen, U. 1040ez 2011 online S. 1040ez 2011 online resident alien, U. 1040ez 2011 online S. 1040ez 2011 online national, or a resident of Canada or Mexico. 1040ez 2011 online However, there is an exception for certain adopted children, as explained next. 1040ez 2011 online Exception for adopted child. 1040ez 2011 online   If you are a U. 1040ez 2011 online S. 1040ez 2011 online citizen or U. 1040ez 2011 online S. 1040ez 2011 online national who has legally adopted a child who is not a U. 1040ez 2011 online S. 1040ez 2011 online citizen, U. 1040ez 2011 online S. 1040ez 2011 online resident alien, or U. 1040ez 2011 online S. 1040ez 2011 online national, this test is met if the child lived with you as a member of your household all year. 1040ez 2011 online This exception also applies if the child was lawfully placed with you for legal adoption. 1040ez 2011 online Child's place of residence. 1040ez 2011 online   Children usually are citizens or residents of the country of their parents. 1040ez 2011 online   If you were a U. 1040ez 2011 online S. 1040ez 2011 online citizen when your child was born, the child may be a U. 1040ez 2011 online S. 1040ez 2011 online citizen and meet this test even if the other parent was a nonresident alien and the child was born in a foreign country. 1040ez 2011 online Foreign students' place of residence. 1040ez 2011 online   Foreign students brought to this country under a qualified international education exchange program and placed in American homes for a temporary period generally are not U. 1040ez 2011 online S. 1040ez 2011 online residents and do not meet this test. 1040ez 2011 online You cannot claim an exemption for them. 1040ez 2011 online However, if you provided a home for a foreign student, you may be able to take a charitable contribution deduction. 1040ez 2011 online See Expenses Paid for Student Living With You in chapter 24. 1040ez 2011 online U. 1040ez 2011 online S. 1040ez 2011 online national. 1040ez 2011 online   A U. 1040ez 2011 online S. 1040ez 2011 online national is an individual who, although not a U. 1040ez 2011 online S. 1040ez 2011 online citizen, owes his or her allegiance to the United States. 1040ez 2011 online U. 1040ez 2011 online S. 1040ez 2011 online nationals include American Samoans and Northern Mariana Islanders who chose to become U. 1040ez 2011 online S. 1040ez 2011 online nationals instead of U. 1040ez 2011 online S. 1040ez 2011 online citizens. 1040ez 2011 online Qualifying Child Five tests must be met for a child to be your qualifying child. 1040ez 2011 online The five tests are: Relationship, Age, Residency, Support, and Joint return. 1040ez 2011 online These tests are explained next. 1040ez 2011 online If a child meets the five tests to be the qualifying child of more than one person, a special rule applies to determine which person can actually treat the child as a qualifying child. 1040ez 2011 online See Special Rule for Qualifying Child of More Than One Person, later. 1040ez 2011 online Relationship Test To meet this test, a child must be: Your son, daughter, stepchild, foster child, or a descendant (for example, your grandchild) of any of them, or Your brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant (for example, your niece or nephew) of any of them. 1040ez 2011 online Adopted child. 1040ez 2011 online   An adopted child is always treated as your own child. 1040ez 2011 online The term “adopted child” includes a child who was lawfully placed with you for legal adoption. 1040ez 2011 online Foster child. 1040ez 2011 online   A foster child is an individual who is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. 1040ez 2011 online Age Test To meet this test, a child must be: Under age 19 at the end of the year and younger than you (or your spouse, if filing jointly), A student under age 24 at the end of the year and younger than you (or your spouse, if filing jointly), or Permanently and totally disabled at any time during the year, regardless of age. 1040ez 2011 online Example. 1040ez 2011 online Your son turned 19 on December 10. 1040ez 2011 online Unless he was permanently and totally disabled or a student, he does not meet the age test because, at the end of the year, he was not under age 19. 1040ez 2011 online Child must be younger than you or spouse. 1040ez 2011 online   To be your qualifying child, a child who is not permanently and totally disabled must be younger than you. 1040ez 2011 online However, if you are married filing jointly, the child must be younger than you or your spouse but does not have to be younger than both of you. 1040ez 2011 online Example 1—child not younger than you or spouse. 1040ez 2011 online Your 23-year-old brother, who is a student and unmarried, lives with you and your spouse. 1040ez 2011 online He is not disabled. 1040ez 2011 online Both you and your spouse are 21 years old, and you file a joint return. 1040ez 2011 online Your brother is not your qualifying child because he is not younger than you or your spouse. 1040ez 2011 online Example 2—child younger than your spouse but not younger than you. 1040ez 2011 online The facts are the same as in Example 1 except your spouse is 25 years old. 1040ez 2011 online Because your brother is younger than your spouse, and you and your spouse are filing a joint return, your brother is your qualifying child, even though he is not younger than you. 1040ez 2011 online Student defined. 1040ez 2011 online   To qualify as a student, your child must be, during some part of each of any 5 calendar months of the year: A full-time student at a school that has a regular teaching staff, course of study, and a regularly enrolled student body at the school, or A student taking a full-time, on-farm training course given by a school described in (1), or by a state, county, or local government agency. 1040ez 2011 online The 5 calendar months do not have to be consecutive. 1040ez 2011 online Full-time student. 1040ez 2011 online   A full-time student is a student who is enrolled for the number of hours or courses the school considers to be full-time attendance. 1040ez 2011 online School defined. 1040ez 2011 online   A school can be an elementary school, junior or senior high school, college, university, or technical, trade, or mechanical school. 1040ez 2011 online However, an on-the-job training course, correspondence school, or school offering courses only through the Internet does not count as a school. 1040ez 2011 online Vocational high school students. 1040ez 2011 online   Students who work on “co-op” jobs in private industry as a part of a school's regular course of classroom and practical training are considered full-time students. 1040ez 2011 online Permanently and totally disabled. 1040ez 2011 online   Your child is permanently and totally disabled if both of the following apply. 1040ez 2011 online He or she cannot engage in any substantial gainful activity because of a physical or mental condition. 1040ez 2011 online A doctor determines the condition has lasted or can be expected to last continuously for at least a year or can lead to death. 1040ez 2011 online Residency Test To meet this test, your child must have lived with you for more than half the year. 1040ez 2011 online There are exceptions for temporary absences, children who were born or died during the year, kidnapped children, and children of divorced or separated parents. 1040ez 2011 online Temporary absences. 1040ez 2011 online   Your child is considered to have lived with you during periods of time when one of you, or both, are temporarily absent due to special circumstances such as: Illness, Education, Business, Vacation, or Military service. 1040ez 2011 online Your child is also considered to have lived with you during any required hospital stay following birth, as long as the child would have lived with you during that time but for the hospitalization. 1040ez 2011 online Death or birth of child. 1040ez 2011 online   A child who was born or died during the year is treated as having lived with you more than half of the year if your home was the child's home more than half of the time he or she was alive during the year. 1040ez 2011 online Child born alive. 1040ez 2011 online   You may be able to claim an exemption for a child born alive during the year, even if the child lived only for a moment. 1040ez 2011 online State or local law must treat the child as having been born alive. 1040ez 2011 online There must be proof of a live birth shown by an official document, such as a birth certificate. 1040ez 2011 online The child must be your qualifying child or qualifying relative, and all the other tests to claim an exemption for a dependent must be met. 1040ez 2011 online Stillborn child. 1040ez 2011 online   You cannot claim an exemption for a stillborn child. 1040ez 2011 online Kidnapped child. 1040ez 2011 online   You may be able to treat your child as meeting the residency test even if the child has been kidnapped. 1040ez 2011 online See Publication 501 for details. 1040ez 2011 online Children of divorced or separated parents (or parents who live apart). 1040ez 2011 online   In most cases, because of the residency test, a child of divorced or separated parents is the qualifying child of the custodial parent. 1040ez 2011 online However, the child will be treated as the qualifying child of the noncustodial parent if all four of the following statements are true. 1040ez 2011 online The parents: Are divorced or legally separated under a decree of divorce or separate maintenance, Are separated under a written separation agreement, or Lived apart at all times during the last 6 months of the year, whether or not they are or were married. 1040ez 2011 online The child received over half of his or her support for the year from the parents. 1040ez 2011 online The child is in the custody of one or both parents for more than half of the year. 1040ez 2011 online Either of the following statements is true. 1040ez 2011 online The custodial parent signs a written declaration, discussed later, that he or she will not claim the child as a dependent for the year, and the noncustodial parent attaches this written declaration to his or her return. 1040ez 2011 online (If the decree or agreement went into effect after 1984 and before 2009, see Post-1984 and pre-2009 divorce decree or separation agreement , later. 1040ez 2011 online If the decree or agreement went into effect after 2008, see Post-2008 divorce decree or separation agreement , later. 1040ez 2011 online ) A pre-1985 decree of divorce or separate maintenance or written separation agreement that applies to 2013 states that the noncustodial parent can claim the child as a dependent, the decree or agreement was not changed after 1984 to say the noncustodial parent cannot claim the child as a dependent, and the noncustodial parent provides at least $600 for the child's support during the year. 1040ez 2011 online Custodial parent and noncustodial parent. 1040ez 2011 online   The custodial parent is the parent with whom the child lived for the greater number of nights during the year. 1040ez 2011 online The other parent is the noncustodial parent. 1040ez 2011 online   If the parents divorced or separated during the year and the child lived with both parents before the separation, the custodial parent is the one with whom the child lived for the greater number of nights during the rest of the year. 1040ez 2011 online   A child is treated as living with a parent for a night if the child sleeps: At that parent's home, whether or not the parent is present, or In the company of the parent, when the child does not sleep at a parent's home (for example, the parent and child are on vacation together). 1040ez 2011 online Equal number of nights. 1040ez 2011 online   If the child lived with each parent for an equal number of nights during the year, the custodial parent is the parent with the higher adjusted gross income (AGI). 1040ez 2011 online December 31. 1040ez 2011 online   The night of December 31 is treated as part of the year in which it begins. 1040ez 2011 online For example, December 31, 2013, is treated as part of 2013. 1040ez 2011 online Emancipated child. 1040ez 2011 online   If a child is emancipated under state law, the child is treated as not living with either parent. 1040ez 2011 online See Examples 5 and 6. 1040ez 2011 online Absences. 1040ez 2011 online   If a child was not with either parent on a particular night (because, for example, the child was staying at a friend's house), the child is treated as living with the parent with whom the child normally would have lived for that night, except for the absence. 1040ez 2011 online But if it cannot be determined with which parent the child normally would have lived or if the child would not have lived with either parent that night, the child is treated as not living with either parent that night. 1040ez 2011 online Parent works at night. 1040ez 2011 online   If, due to a parent's nighttime work schedule, a child lives for a greater number of days, but not nights, with the parent who works at night, that parent is treated as the custodial parent. 1040ez 2011 online On a school day, the child is treated as living at the primary residence registered with the school. 1040ez 2011 online Example 1—child lived with one parent for a greater number of nights. 1040ez 2011 online You and your child’s other parent are divorced. 1040ez 2011 online In 2013, your child lived with you 210 nights and with the other parent 155 nights. 1040ez 2011 online You are the custodial parent. 1040ez 2011 online Example 2—child is away at camp. 1040ez 2011 online In 2013, your daughter lives with each parent for alternate weeks. 1040ez 2011 online In the summer, she spends 6 weeks at summer camp. 1040ez 2011 online During the time she is at camp, she is treated as living with you for 3 weeks and with her other parent, your ex-spouse, for 3 weeks because this is how long she would have lived with each parent if she had not attended summer camp. 1040ez 2011 online Example 3—child lived same number of nights with each parent. 1040ez 2011 online Your son lived with you 180 nights during the year and lived the same number of nights with his other parent, your ex-spouse. 1040ez 2011 online Your AGI is $40,000. 1040ez 2011 online Your ex-spouse's AGI is $25,000. 1040ez 2011 online You are treated as your son's custodial parent because you have the higher AGI. 1040ez 2011 online Example 4—child is at parent’s home but with other parent. 1040ez 2011 online Your son normally lives with you during the week and with his other parent, your ex-spouse, every other weekend. 1040ez 2011 online You become ill and are hospitalized. 1040ez 2011 online The other parent lives in your home with your son for 10 consecutive days while you are in the hospital. 1040ez 2011 online Your son is treated as living with you during this 10-day period because he was living in your home. 1040ez 2011 online Example 5—child emancipated in May. 1040ez 2011 online When your son turned age 18 in May 2013, he became emancipated under the law of the state where he lives. 1040ez 2011 online As a result, he is not considered in the custody of his parents for more than half of the year. 1040ez 2011 online The special rule for children of divorced or separated parents does not apply. 1040ez 2011 online Example 6—child emancipated in August. 1040ez 2011 online Your daughter lives with you from January 1, 2013, until May 31, 2013, and lives with her other parent, your ex-spouse, from June 1, 2013, through the end of the year. 1040ez 2011 online She turns 18 and is emancipated under state law on August 1, 2013. 1040ez 2011 online Because she is treated as not living with either parent beginning on August 1, she is treated as living with you the greater number of nights in 2013. 1040ez 2011 online You are the custodial parent. 1040ez 2011 online Written declaration. 1040ez 2011 online    The custodial parent may use either Form 8332 or a similar statement (containing the same information required by the form) to make the written declaration to release the exemption to the noncustodial parent. 1040ez 2011 online The noncustodial parent must attach a copy of the form or statement to his or her tax return. 1040ez 2011 online   The exemption can be released for 1 year, for a number of specified years (for example, alternate years), or for all future years, as specified in the declaration. 1040ez 2011 online Post-1984 and pre-2009 divorce decree or separation agreement. 1040ez 2011 online   If the divorce decree or separation agreement went into effect after 1984 and before 2009, the noncustodial parent may be able to attach certain pages from the decree or agreement instead of Form 8332. 1040ez 2011 online The decree or agreement must state all three of the following. 1040ez 2011 online The noncustodial parent can claim the child as a dependent without regard to any condition, such as payment of support. 1040ez 2011 online The custodial parent will not claim the child as a dependent for the year. 1040ez 2011 online The years for which the noncustodial parent, rather than the custodial parent, can claim the child as a dependent. 1040ez 2011 online   The noncustodial parent must attach all of the following pages of the decree or agreement to his or her tax return. 1040ez 2011 online The cover page (write the other parent's social security number on this page). 1040ez 2011 online The pages that include all of the information identified in items (1) through (3) above. 1040ez 2011 online The signature page with the other parent's signature and the date of the agreement. 1040ez 2011 online Post-2008 divorce decree or separation agreement. 1040ez 2011 online   The noncustodial parent cannot attach pages from the decree or agreement instead of Form 8332 if the decree or agreement went into effect after 2008. 1040ez 2011 online The custodial parent must sign either Form 8332 or a similar statement whose only purpose is to release the custodial parent's claim to an exemption for a child, and the noncustodial parent must attach a copy to his or her return. 1040ez 2011 online The form or statement must release the custodial parent's claim to the child without any conditions. 1040ez 2011 online For example, the release must not depend on the noncustodial parent paying support. 1040ez 2011 online    The noncustodial parent must attach the required information even if it was filed with a return in an earlier year. 1040ez 2011 online Revocation of release of claim to an exemption. 1040ez 2011 online   The custodial parent can revoke a release of claim to exemption that he or she previously released to the noncustodial parent on Form 8332 (or a similar statement). 1040ez 2011 online For the revocation to be effective for 2013, the custodial parent must have given (or made reasonable efforts to give) written notice of the revocation to the noncustodial parent in 2012 or earlier. 1040ez 2011 online The custodial parent can use Part III of Form 8332 for this purpose and must attach a copy of the revocation to his or her return for each tax year he or she claims the child as a dependent as a result of the revocation. 1040ez 2011 online Remarried parent. 1040ez 2011 online   If you remarry, the support provided by your new spouse is treated as provided by you. 1040ez 2011 online Parents who never married. 1040ez 2011 online   This special rule for divorced or separated parents also applies to parents who never married, and who lived apart at all times during the last 6 months of the year. 1040ez 2011 online Support Test (To Be a Qualifying Child) To meet this test, the child cannot have provided more than half of his or her own support for the year. 1040ez 2011 online This test is different from the support test to be a qualifying relative, which is described later. 1040ez 2011 online However, to see what is or is not support, see Support Test (To Be a Qualifying Relative) , later. 1040ez 2011 online If you are not sure whether a child provided more than half of his or her own support, you may find Worksheet 3-1 helpful. 1040ez 2011 online Worksheet 3-1. 1040ez 2011 online Worksheet for Determining Support Funds Belonging to the Person You Supported       1. 1040ez 2011 online Enter the total funds belonging to the person you supported, including income received (taxable and nontaxable) and amounts borrowed during the year, plus the amount in savings and other accounts at the beginning of the year. 1040ez 2011 online Do not include funds provided by the state; include those amounts on line 23 instead 1. 1040ez 2011 online     2. 1040ez 2011 online Enter the amount on line 1 that was used for the person's support 2. 1040ez 2011 online     3. 1040ez 2011 online Enter the amount on line 1 that was used for other purposes 3. 1040ez 2011 online     4. 1040ez 2011 online Enter the total amount in the person's savings and other accounts at the end of the year 4. 1040ez 2011 online     5. 1040ez 2011 online Add lines 2 through 4. 1040ez 2011 online (This amount should equal line 1. 1040ez 2011 online ) 5. 1040ez 2011 online     Expenses for Entire Household (where the person you supported lived)       6. 1040ez 2011 online Lodging (complete line 6a or 6b):         a. 1040ez 2011 online Enter the total rent paid 6a. 1040ez 2011 online       b. 1040ez 2011 online Enter the fair rental value of the home. 1040ez 2011 online If the person you supported owned the home,  also include this amount in line 21 6b. 1040ez 2011 online     7. 1040ez 2011 online Enter the total food expenses 7. 1040ez 2011 online     8. 1040ez 2011 online Enter the total amount of utilities (heat, light, water, etc. 1040ez 2011 online not included in line 6a or 6b) 8. 1040ez 2011 online     9. 1040ez 2011 online Enter the total amount of repairs (not included in line 6a or 6b) 9. 1040ez 2011 online     10. 1040ez 2011 online Enter the total of other expenses. 1040ez 2011 online Do not include expenses of maintaining the home, such as mortgage interest, real estate taxes, and insurance 10. 1040ez 2011 online     11. 1040ez 2011 online Add lines 6a through 10. 1040ez 2011 online These are the total household expenses 11. 1040ez 2011 online     12. 1040ez 2011 online Enter total number of persons who lived in the household 12. 1040ez 2011 online     Expenses for the Person You Supported       13. 1040ez 2011 online Divide line 11 by line 12. 1040ez 2011 online This is the person's share of the household expenses 13. 1040ez 2011 online     14. 1040ez 2011 online Enter the person's total clothing expenses 14. 1040ez 2011 online     15. 1040ez 2011 online Enter the person's total education expenses 15. 1040ez 2011 online     16. 1040ez 2011 online Enter the person's total medical and dental expenses not paid for or reimbursed by insurance 16. 1040ez 2011 online     17. 1040ez 2011 online Enter the person's total travel and recreation expenses 17. 1040ez 2011 online     18. 1040ez 2011 online Enter the total of the person's other expenses 18. 1040ez 2011 online     19. 1040ez 2011 online Add lines 13 through 18. 1040ez 2011 online This is the total cost of the person's support for the year 19. 1040ez 2011 online     Did the Person Provide More Than Half of His or Her Own Support?       20. 1040ez 2011 online Multiply line 19 by 50% (. 1040ez 2011 online 50) 20. 1040ez 2011 online     21. 1040ez 2011 online Enter the amount from line 2, plus the amount from line 6b if the person you supported owned  the home. 1040ez 2011 online This is the amount the person provided for his or her own support 21. 1040ez 2011 online     22. 1040ez 2011 online Is line 21 more than line 20?   No. 1040ez 2011 online You meet the support test for this person to be your qualifying child. 1040ez 2011 online If this person also meets the other tests to be a qualifying child, stop here; do not complete lines 23–26. 1040ez 2011 online Otherwise, go to line 23 and fill out the rest of the worksheet to determine if this person is your qualifying relative. 1040ez 2011 online    Yes. 1040ez 2011 online You do not meet the support test for this person to be either your qualifying child or your qualifying relative. 1040ez 2011 online Stop here. 1040ez 2011 online        Did You Provide More Than Half?       23. 1040ez 2011 online Enter the amount others provided for the person's support. 1040ez 2011 online Include amounts provided by state, local, and other welfare societies or agencies. 1040ez 2011 online Do not include any amounts included on line 1 23. 1040ez 2011 online     24. 1040ez 2011 online Add lines 21 and 23 24. 1040ez 2011 online     25. 1040ez 2011 online Subtract line 24 from line 19. 1040ez 2011 online This is the amount you provided for the person's support 25. 1040ez 2011 online     26. 1040ez 2011 online Is line 25 more than line 20?   Yes. 1040ez 2011 online You meet the support test for this person to be your qualifying relative. 1040ez 2011 online    No. 1040ez 2011 online You do not meet the support test for this person to be your qualifying relative. 1040ez 2011 online You cannot claim an exemption for this person unless you can do so under a multiple support agreement, the support test for children of divorced or separated parents, or the special rule for kidnapped children. 1040ez 2011 online See Multiple Support Agreement or Support Test for Children of Divorced or Separated Parents (or Parents Who Live Apart) , or Kidnapped child under Qualifying Relative. 1040ez 2011 online   Example. 1040ez 2011 online You provided $4,000 toward your 16-year-old son's support for the year. 1040ez 2011 online He has a part-time job and provided $6,000 to his own support. 1040ez 2011 online He provided more than half of his own support for the year. 1040ez 2011 online He is not your qualifying child. 1040ez 2011 online Foster care payments and expenses. 1040ez 2011 online   Payments you receive for the support of a foster child from a child placement agency are considered support provided by the agency. 1040ez 2011 online Similarly, payments you receive for the support of a foster child from a state or county are considered support provided by the state or county. 1040ez 2011 online   If you are not in the trade or business of providing foster care and your unreimbursed out-of-pocket expenses in caring for a foster child were mainly to benefit an organization qualified to receive deductible charitable contributions, the expenses are deductible as charitable contributions but are not considered support you provided. 1040ez 2011 online For more information about the deduction for charitable contributions, see chapter 24. 1040ez 2011 online If your unreimbursed expenses are not deductible as charitable contributions, they may qualify as support you provided. 1040ez 2011 online   If you are in the trade or business of providing foster care, your unreimbursed expenses are not considered support provided by you. 1040ez 2011 online Example 1. 1040ez 2011 online Lauren, a foster child, lived with Mr. 1040ez 2011 online and Mrs. 1040ez 2011 online Smith for the last 3 months of the year. 1040ez 2011 online The Smiths cared for Lauren because they wanted to adopt her (although she had not been placed with them for adoption). 1040ez 2011 online They did not care for her as a trade or business or to benefit the agency that placed her in their home. 1040ez 2011 online The Smiths' unreimbursed expenses are not deductible as charitable contributions but are considered support they provided for Lauren. 1040ez 2011 online Example 2. 1040ez 2011 online You provided $3,000 toward your 10-year-old foster child's support for the year. 1040ez 2011 online The state government provided $4,000, which is considered support provided by the state, not by the child. 1040ez 2011 online See Support provided by the state (welfare, food stamps, housing, etc. 1040ez 2011 online ) , later. 1040ez 2011 online Your foster child did not provide more than half of her own support for the year. 1040ez 2011 online Scholarships. 1040ez 2011 online   A scholarship received by a child who is a student is not taken into account in determining whether the child provided more than half of his or her own support. 1040ez 2011 online Joint Return Test (To Be a Qualifying Child) To meet this test, the child cannot file a joint return for the year. 1040ez 2011 online Exception. 1040ez 2011 online   An exception to the joint return test applies if your child and his or her spouse file a joint return only to claim a refund of income tax withheld or estimated tax paid. 1040ez 2011 online Example 1—child files joint return. 1040ez 2011 online You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. 1040ez 2011 online He earned $25,000 for the year. 1040ez 2011 online The couple files a joint return. 1040ez 2011 online Because your daughter and her husband file a joint return, she is not your qualifying child. 1040ez 2011 online Example 2—child files joint return only as a claim for refund of withheld tax. 1040ez 2011 online Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. 1040ez 2011 online Neither is required to file a tax return. 1040ez 2011 online They do not have a child. 1040ez 2011 online Taxes were taken out of their pay so they filed a joint return only to get a refund of the withheld taxes. 1040ez 2011 online The exception to the joint return test applies, so your son may be your qualifying child if all the other tests are met. 1040ez 2011 online Example 3—child files joint return to claim American opportunity credit. 1040ez 2011 online The facts are the same as in Example 2 except no taxes were taken out of your son's pay. 1040ez 2011 online He and his wife were not required to file a tax return. 1040ez 2011 online However, they file a joint return to claim an American opportunity credit of $124 and get a refund of that amount. 1040ez 2011 online Because claiming the American opportunity credit is their reason for filing the return, they are not filing it only to get a refund of income tax withheld or estimated tax paid. 1040ez 2011 online The exception to the joint return test does not apply, so your son is not your qualifying child. 1040ez 2011 online Special Rule for Qualifying Child of More Than One Person If your qualifying child is not a qualifying child of anyone else, this special rule does not apply to you and you do not need to read about it. 1040ez 2011 online This is also true if your qualifying child is not a qualifying child of anyone else except your spouse with whom you file a joint return. 1040ez 2011 online If a child is treated as the qualifying child of the noncustodial parent under the rules for children of divorced or separated parents (or parents who live apart) described earlier, see Applying this special rule to divorced or separated parents (or parents who live apart), later. 1040ez 2011 online Sometimes, a child meets the relationship, age, residency, support, and joint return tests to be a qualifying child of more than one person. 1040ez 2011 online Although the child is a qualifying child of each of these persons, only one person can actually treat the child as a qualifying child to take all of the following tax benefits (provided the person is eligible for each benefit). 1040ez 2011 online The exemption for the child. 1040ez 2011 online The child tax credit. 1040ez 2011 online Head of household filing status. 1040ez 2011 online The credit for child and dependent care expenses. 1040ez 2011 online The exclusion from income for dependent care benefits. 1040ez 2011 online The earned income credit. 1040ez 2011 online The other person cannot take any of these benefits based on this qualifying child. 1040ez 2011 online In other words, you and the other person cannot agree to divide these benefits between you. 1040ez 2011 online The other person cannot take any of these tax benefits for a child unless he or she has a different qualifying child. 1040ez 2011 online Tiebreaker rules. 1040ez 2011 online   To determine which person can treat the child as a qualifying child to claim these six tax benefits, the following tiebreaker rules apply. 1040ez 2011 online If only one of the persons is the child's parent, the child is treated as the qualifying child of the parent. 1040ez 2011 online If the parents file a joint return together and can claim the child as a qualifying child, the child is treated as the qualifying child of the parents. 1040ez 2011 online If the parents do not file a joint return together but both parents claim the child as a qualifying child, the IRS will treat the child as the qualifying child of the parent with whom the child lived for the longer period of time during the year. 1040ez 2011 online If the child lived with each parent for the same amount of time, the IRS will treat the child as the qualifying child of the parent who had the higher adjusted gross income (AGI) for the year. 1040ez 2011 online If no parent can claim the child as a qualifying child, the child is treated as the qualifying child of the person who had the highest AGI for the year. 1040ez 2011 online If a parent can claim the child as a qualifying child but no parent does so claim the child, the child is treated as the qualifying child of the person who had the highest AGI for the year, but only if that person's AGI is higher than the highest AGI of any of the child's parents who can claim the child. 1040ez 2011 online If the child's parents file a joint return with each other, this rule can be applied by dividing the parents' combined AGI equally between the parents. 1040ez 2011 online See Example 6 . 1040ez 2011 online   Subject to these tiebreaker rules, you and the other person may be able to choose which of you claims the child as a qualifying child. 1040ez 2011 online Example 1—child lived with parent and grandparent. 1040ez 2011 online You and your 3-year-old daughter Jane lived with your mother all year. 1040ez 2011 online You are 25 years old, unmarried, and your AGI is $9,000. 1040ez 2011 online Your mother's AGI is $15,000. 1040ez 2011 online Jane's father did not live with you or your daughter. 1040ez 2011 online You have not signed Form 8332 (or a similar statement) to release the child's exemption to the noncustodial parent. 1040ez 2011 online Jane is a qualifying child of both you and your mother because she meets the relationship, age, residency, support, and joint return tests for both you and your mother. 1040ez 2011 online However, only one of you can claim her. 1040ez 2011 online Jane is not a qualifying child of anyone else, including her father. 1040ez 2011 online You agree to let your mother claim Jane. 1040ez 2011 online This means your mother can claim Jane as a qualifying child for all of the six tax benefits listed earlier, if she qualifies (and if you do not claim Jane as a qualifying child for any of those tax benefits). 1040ez 2011 online Example 2—parent has higher AGI than grandparent. 1040ez 2011 online The facts are the same as in Example 1 except your AGI is $18,000. 1040ez 2011 online Because your mother's AGI is not higher than yours, she cannot claim Jane. 1040ez 2011 online Only you can claim Jane. 1040ez 2011 online Example 3—two persons claim same child. 1040ez 2011 online The facts are the same as in Example 1 except that you and your mother both claim Jane as a qualifying child. 1040ez 2011 online In this case, you, as the child's parent, will be the only one allowed to claim Jane as a qualifying child. 1040ez 2011 online The IRS will disallow your mother's claim to the six tax benefits listed earlier unless she has another qualifying child. 1040ez 2011 online Example 4—qualifying children split between two persons. 1040ez 2011 online The facts are the same as in Example 1 except you also have two other young children who are qualifying children of both you and your mother. 1040ez 2011 online Only one of you can claim each child. 1040ez 2011 online However, if your mother's AGI is higher than yours, you can allow your mother to claim one or more of the children. 1040ez 2011 online For example, if you claim one child, your mother can claim the other two. 1040ez 2011 online Example 5—taxpayer who is a qualifying child. 1040ez 2011 online The facts are the same as in Example 1 except you are only 18 years old and did not provide more than half of your own support for the year. 1040ez 2011 online This means you are your mother's qualifying child. 1040ez 2011 online If she can claim you as a dependent, then you cannot claim your daughter as a dependent because of the Dependent Taxpayer Test explained earlier. 1040ez 2011 online Example 6—child lived with both parents and grandparent. 1040ez 2011 online The facts are the same as in Example 1 except you are married to your daughter's father. 1040ez 2011 online The two of you live together with your daughter and your mother, and have an AGI of $20,000 on a joint return. 1040ez 2011 online If you and your husband do not claim your daughter as a qualifying child, your mother can claim her instead. 1040ez 2011 online Even though the AGI on your joint return, $20,000, is more than your mother's AGI of $15,000, for this purpose each parent's AGI can be treated as $10,000, so your mother's $15,000 AGI is treated as higher than the highest AGI of any of the child's parents who can claim the child. 1040ez 2011 online Example 7—separated parents. 1040ez 2011 online You, your husband, and your 10-year-old son lived together until August 1, 2013, when your husband moved out of the household. 1040ez 2011 online In August and September, your son lived with you. 1040ez 2011 online For the rest of the year, your son lived with your husband, the boy's father. 1040ez 2011 online Your son is a qualifying child of both you and your husband because your son lived with each of you for more than half the year and because he met the relationship, age, support, and joint return tests for both of you. 1040ez 2011 online At the end of the year, you and your husband still were not divorced, legally separated, or separated under a written separation agreement, so the rule for children of divorced or separated parents (or parents who live apart) does not apply. 1040ez 2011 online You and your husband will file separate returns. 1040ez 2011 online Your husband agrees to let you treat your son as a qualifying child. 1040ez 2011 online This means, if your husband does not claim your son as a qualifying child, you can claim your son as a qualifying child for the dependency exemption, child tax credit, and exclusion for dependent care benefits (if you qualify for each of those tax benefits). 1040ez 2011 online However, you cannot claim head of household filing status because you and your husband did not live apart for the last 6 months of the year. 1040ez 2011 online As a result, your filing status is married filing separately, so you cannot claim the earned income credit or the credit for child and dependent care expenses. 1040ez 2011 online Example 8—separated parents claim same child. 1040ez 2011 online The facts are the same as in Example 7 except that you and your husband both claim your son as a qualifying child. 1040ez 2011 online In this case, only your husband will be allowed to treat your son as a qualifying child. 1040ez 2011 online This is because, during 2013, the boy lived with him longer than with you. 1040ez 2011 online If you claimed an exemption or the child tax credit for your son, the IRS will disallow your claim to both these tax benefits. 1040ez 2011 online If you do not have another qualifying child or dependent, the IRS will also disallow your claim to the exclusion for dependent care benefits. 1040ez 2011 online In addition, because you and your husband did not live apart for the last 6 months of the year, your husband cannot claim head of household filing status. 1040ez 2011 online As a result, his filing status is married filing separately, so he cannot claim the earned income credit or the credit for child and dependent care expenses. 1040ez 2011 online Example 9—unmarried parents. 1040ez 2011 online You, your 5-year-old son, and your son's father lived together all year. 1040ez 2011 online You and your son's father are not married. 1040ez 2011 online Your son is a qualifying child of both you and his father because he meets the relationship, age, residency, support, and joint return tests for both you and his father. 1040ez 2011 online Your AGI is $12,000 and your son's father's AGI is $14,000. 1040ez 2011 online Your son's father agrees to let you claim the child as a qualifying child. 1040ez 2011 online This means you can claim him as a qualifying child for the dependency exemption, child tax credit, head of household filing status, credit for child and dependent care expenses, exclusion for dependent care benefits, and the earned income credit, if you qualify for each of those tax benefits (and if your son's father does not, in fact, claim your son as a qualifying child for any of those tax benefits). 1040ez 2011 online Example 10—unmarried parents claim same child. 1040ez 2011 online The facts are the same as in Example 9 except that you and your son's father both claim your son as a qualifying child. 1040ez 2011 online In this case, only your son's father will be allowed to treat your son as a qualifying child. 1040ez 2011 online This is because his AGI, $14,000, is more than your AGI, $12,000. 1040ez 2011 online If you claimed an exemption or the child tax credit for your son, the IRS will disallow your claim to both these tax benefits. 1040ez 2011 online If you do not have another qualifying child or dependent, the IRS will also disallow your claim to the earned income credit, head of household filing status, the credit for child and dependent care expenses, and the exclusion for dependent care benefits. 1040ez 2011 online Example 11—child did not live with a parent. 1040ez 2011 online You and your 7-year-old niece, your sister's child, lived with your mother all year. 1040ez 2011 online You are 25 years old, and your AGI is $9,300. 1040ez 2011 online Your mother's AGI is $15,000. 1040ez 2011 online Your niece's parents file jointly, have an AGI of less than $9,000, and do not live with you or their child. 1040ez 2011 online Your niece is a qualifying child of both you and your mother because she meets the relationship, age, residency, support, and joint return tests for both you and your mother. 1040ez 2011 online However, only your mother can treat her as a qualifying child. 1040ez 2011 online This is because your mother's AGI, $15,000, is more than your AGI, $9,300. 1040ez 2011 online Applying this special rule to divorced or separated parents (or parents who live apart). 1040ez 2011 online   If a child is treated as the qualifying child of the noncustodial parent under the rules described earlier for children of divorced or separated parents (or parents who live apart), only the noncustodial parent can claim an exemption and the child tax credit for the child. 1040ez 2011 online However, the custodial parent, if eligible, or other eligible person can claim the child as a qualifying child for head of household filing status, the credit for child and dependent care expenses, the exclusion for dependent care benefits, and the earned income credit. 1040ez 2011 online If the child is the qualifying child of more than one person for these benefits, then the tiebreaker rules just explained determine which person can treat the child as a qualifying child. 1040ez 2011 online Example 1. 1040ez 2011 online You and your 5-year-old son lived all year with your mother, who paid the entire cost of keeping up the home. 1040ez 2011 online Your AGI is $10,000. 1040ez 2011 online Your mother's AGI is $25,000. 1040ez 2011 online Your son's father did not live with you or your son. 1040ez 2011 online Under the rules explained earlier for children of divorced or separated parents (or parents who live apart), your son is treated as the qualifying child of his father, who can claim an exemption and the child tax credit for him. 1040ez 2011 online Because of this, you cannot claim an exemption or the child tax credit for your son. 1040ez 2011 online However, your son's father cannot claim your son as a qualifying child for head of household filing status, the credit for child and dependent care expenses, the exclusion for dependent care benefits, or the earned income credit. 1040ez 2011 online You and your mother did not have any child care expenses or dependent care benefits, so neither of you can claim the credit for child and dependent care expenses or the exclusion for dependent care benefits. 1040ez 2011 online But the boy is a qualifying child of both you and your mother for head of household filing status and the earned income credit because he meets the relationship, age, residency, support, and joint return tests for both you and your mother. 1040ez 2011 online (Note: The support test does not apply for the earned income credit. 1040ez 2011 online ) However, you agree to let your mother claim your son. 1040ez 2011 online This means she can claim him for head of household filing status and the earned income credit if she qualifies for each and if you do not claim him as a qualifying child for the earned income credit. 1040ez 2011 online (You cannot claim head of household filing status because your mother paid the entire cost of keeping up the home. 1040ez 2011 online ) Example 2. 1040ez 2011 online The facts are the same as in Example 1 except your AGI is $25,000 and your mother's AGI is $21,000. 1040ez 2011 online Your mother cannot claim your son as a qualifying child for any purpose because her AGI is not higher than yours. 1040ez 2011 online Example 3. 1040ez 2011 online The facts are the same as in Example 1 except you and your mother both claim your son as a qualifying child for the earned income credit. 1040ez 2011 online Your mother also claims him as a qualifying child for head of household filing status. 1040ez 2011 online You, as the child's parent, will be the only one allowed to claim your son as a qualifying child for the earned income credit. 1040ez 2011 online The IRS will disallow your mother's claim to the earned income credit and head of household filing status unless she has another qualifying child. 1040ez 2011 online Qualifying Relative Four tests must be met for a person to be your qualifying relative. 1040ez 2011 online The four tests are: Not a qualifying child test, Member of household or relationship test, Gross income test, and Support test. 1040ez 2011 online Age. 1040ez 2011 online   Unlike a qualifying child, a qualifying relative can be any age. 1040ez 2011 online There is no age test for a qualifying relative. 1040ez 2011 online Kidnapped child. 1040ez 2011 online   You may be able to treat a child as your qualifying relative even if the child has been kidnapped. 1040ez 2011 online See Publication 501 for details. 1040ez 2011 online Not a Qualifying Child Test A child is not your qualifying relative if the child is your qualifying child or the qualifying child of any other taxpayer. 1040ez 2011 online Example 1. 1040ez 2011 online Your 22-year-old daughter, who is a student, lives with you and meets all the tests to be your qualifying child. 1040ez 2011 online She is not your qualifying relative. 1040ez 2011 online Example 2. 1040ez 2011 online Your 2-year-old son lives with your parents and meets all the tests to be their qualifying child. 1040ez 2011 online He is not your qualifying relative. 1040ez 2011 online Example 3. 1040ez 2011 online Your son lives with you but is not your qualifying child because he is 30 years old and does not meet the age test. 1040ez 2011 online He may be your qualifying relative if the gross income test and the support test are met. 1040ez 2011 online Example 4. 1040ez 2011 online Your 13-year-old grandson lived with his mother for 3 months, with his uncle for 4 months, and with you for 5 months during the year. 1040ez 2011 online He is not your qualifying child because he does not meet the residency test. 1040ez 2011 online He may be your qualifying relative if the gross income test and the support test are met. 1040ez 2011 online Child of person not required to file a return. 1040ez 2011 online   A child is not the qualifying child of any other taxpayer and so may qualify as your qualifying relative if the child's parent (or other person for whom the child is defined as a qualifying child) is not required to file an income tax return and either: Does not file an income tax return, or Files a return only to get a refund of income tax withheld or estimated tax paid. 1040ez 2011 online Example 1—return not required. 1040ez 2011 online You support an unrelated friend and her 3-year-old child, who lived with you all year in your home. 1040ez 2011 online Your friend has no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. 1040ez 2011 online Both your friend and her child are your qualifying relatives if the support test is met. 1040ez 2011 online Example 2—return filed to claim refund. 1040ez 2011 online The facts are the same as in Example 1 except your friend had wages of $1,500 during the year and had income tax withheld from her wages. 1040ez 2011 online She files a return only to get a refund of the income tax withheld and does not claim the earned income credit or any other tax credits or deductions. 1040ez 2011 online Both your friend and her child are your qualifying relatives if the support test is met. 1040ez 2011 online Example 3—earned income credit claimed. 1040ez 2011 online The facts are the same as in Example 2 except your friend had wages of $8,000 during the year and claimed the earned income credit on her return. 1040ez 2011 online Your friend's child is the qualifying child of another taxpayer (your friend), so you cannot claim your friend's child as your qualifying relative. 1040ez 2011 online Child in Canada or Mexico. 1040ez 2011 online   You may be able to claim your child as a dependent even if the child lives in Canada or Mexico. 1040ez 2011 online If the child does not live with you, the child does not meet the residency test to be your qualifying child. 1040ez 2011 online However, the child may still be your qualifying relative. 1040ez 2011 online If the persons the child does live with are not U. 1040ez 2011 online S. 1040ez 2011 online citizens and have no U. 1040ez 2011 online S. 1040ez 2011 online gross income, those persons are not “taxpayers,” so the child is not the qualifying child of any other taxpayer. 1040ez 2011 online If the child is not the qualifying child of any other taxpayer, the child is your qualifying relative as long as the gross income test and the support test are met. 1040ez 2011 online   You cannot claim as a dependent a child who lives in a foreign country other than Canada or Mexico, unless the child is a U. 1040ez 2011 online S. 1040ez 2011 online citizen, U. 1040ez 2011 online S. 1040ez 2011 online resident alien, or U. 1040ez 2011 online S. 1040ez 2011 online national. 1040ez 2011 online There is an exception for certain adopted children who lived with you all year. 1040ez 2011 online See Citizen or Resident Test , earlier. 1040ez 2011 online Example. 1040ez 2011 online You provide all the support of your children, ages 6, 8, and 12, who live in Mexico with your mother and have no income. 1040ez 2011 online You are single and live in the United States. 1040ez 2011 online Your mother is not a U. 1040ez 2011 online S. 1040ez 2011 online citizen and has no U. 1040ez 2011 online S. 1040ez 2011 online income, so she is not a “taxpayer. 1040ez 2011 online ” Your children are not your qualifying children because they do not meet the residency test. 1040ez 2011 online But since they are not the qualifying children of any other taxpayer, they are your qualifying relatives and you can claim them as dependents. 1040ez 2011 online You may also be able to claim your mother as a dependent if the gross income and support tests are met. 1040ez 2011 online Member of Household or Relationship Test To meet this test, a person must either: Live with you all year as a member of your household, or Be related to you in one of the ways listed under Relatives who do not have to live with you . 1040ez 2011 online If at any time during the year the person was your spouse, that person cannot be your qualifying relative. 1040ez 2011 online However, see Personal Exemptions , earlier. 1040ez 2011 online Relatives who do not have to live with you. 1040ez 2011 online   A person related to you in any of the following ways does not have to live with you all year as a member of your household to meet this test. 1040ez 2011 online Your child, stepchild, foster child, or a descendant of any of them (for example, your grandchild). 1040ez 2011 online (A legally adopted child is considered your child. 1040ez 2011 online ) Your brother, sister, half brother, half sister, stepbrother, or stepsister. 1040ez 2011 online Your father, mother, grandparent, or other direct ancestor, but not foster parent. 1040ez 2011 online Your stepfather or stepmother. 1040ez 2011 online A son or daughter of your brother or sister. 1040ez 2011 online A son or daughter of your half brother or half sister. 1040ez 2011 online A brother or sister of your father or mother. 1040ez 2011 online Your son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. 1040ez 2011 online Any of these relationships that were established by marriage are not ended by death or divorce. 1040ez 2011 online Example. 1040ez 2011 online You and your wife began supporting your wife's father, a widower, in 2006. 1040ez 2011 online Your wife died in 2012. 1040ez 2011 online Despite your wife's death, your father-in-law continues to meet this test, even if he does not live with you. 1040ez 2011 online You can claim him as a dependent if all other tests are met, including the gross income test and support test. 1040ez 2011 online Foster child. 1040ez 2011 online   A foster child is an individual who is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. 1040ez 2011 online Joint return. 1040ez 2011 online   If you file a joint return, the person can be related to either you or your spouse. 1040ez 2011 online Also, the person does not need to be related to the spouse who provides support. 1040ez 2011 online   For example, your spouse's uncle who receives more than half of his support from you may be your qualifying relative, even though he does not live with you. 1040ez 2011 online However, if you and your spouse file separate returns, your spouse's uncle can be your qualifying relative only if he lives with you all year as a member of your household. 1040ez 2011 online Temporary absences. 1040ez 2011 online   A person is considered to live with you as a member of your household during periods of time when one of you, or both, are temporarily absent due to special circumstances such as: Illness, Education, Business, Vacation, or Military service. 1040ez 2011 online   If the person is placed in a nursing home for an indefinite period of time to receive constant medical care, the absence may be considered temporary. 1040ez 2011 online Death or birth. 1040ez 2011 online   A person who died during the year, but lived with you as a member of your household until death, will meet this test. 1040ez 2011 online The same is true for a child who was born during the year and lived with you as a member of your household for the rest of the year. 1040ez 2011 online The test is also met if a child lived with you as a member of your household except for any required hospital stay following birth. 1040ez 2011 online   If your dependent died during the year and you otherwise qualify to claim an exemption for the dependent, you can still claim the exemption. 1040ez 2011 online Example. 1040ez 2011 online Your dependent mother died on January 15. 1040ez 2011 online She met the tests to be your qualifying relative. 1040ez 2011 online The other tests to claim an exemption for a dependent were also met. 1040ez 2011 online You can claim an exemption for her on your return. 1040ez 2011 online Local law violated. 1040ez 2011 online   A person does not meet this test if at any time during the year the relationship between you and that person violates local law. 1040ez 2011 online Example. 1040ez 2011 online Your girlfriend lived with you as a member of your household all year. 1040ez 2011 online However, your relationship with her violated the laws of the state where you live, because she was married to someone else. 1040ez 2011 online Therefore, she does not meet this test and you cannot claim her as a dependent. 1040ez 2011 online Adopted child. 1040ez 2011 online   An adopted child is always treated as your own child. 1040ez 2011 online The term “adopted child” includes a child who was lawfully placed with you for legal adoption. 1040ez 2011 online Cousin. 1040ez 2011 online   Your cousin meets this test only if he or she lives with you all year as a member of your household. 1040ez 2011 online A cousin is a descendant of a brother or sister of your father or mother. 1040ez 2011 online Gross Income Test To meet this test, a person's gross income for the year must be less than $3,900. 1040ez 2011 online Gross income defined. 1040ez 2011 online   Gross income is all income in the form of money, property, and services that is not exempt from tax. 1040ez 2011 online   In a manufacturing, merchandising, or mining business, gross income is the total net sales minus the cost of goods sold, plus any miscellaneous income from the business. 1040ez 2011 online   Gross receipts from rental property are gross income. 1040ez 2011 online Do not deduct taxes, repairs, or other expenses, to determine the gross income from rental property. 1040ez 2011 online   Gross income includes a partner's share of the gross (not a share of the net) partnership income. 1040ez 2011 online    Gross income also includes all taxable unemployment compensation and certain scholarship and fellowship grants. 1040ez 2011 online Scholarships received by degree candidates and used for tuition, fees, supplies, books, and equipment required for particular courses generally are not included in gross income. 1040ez 2011 online For more information about scholarships, see chapter 12. 1040ez 2011 online   Tax-exempt income, such as certain social security benefits, is not included in gross income. 1040ez 2011 online Disabled dependent working at sheltered workshop. 1040ez 2011 online   For purposes of the gross income test, the gross income of an individual who is permanently and totally disabled at any time during the year does not include income for services the individual performs at a sheltered workshop. 1040ez 2011 online The availability of medical care at the workshop must be the main reason for the individual's presence there. 1040ez 2011 online Also, the income must come solely from activities at the workshop that are incident to this medical care. 1040ez 2011 online   A “sheltered workshop” is a school that: Provides special instruction or training designed to alleviate the disability of the individual, and Is operated by certain tax-exempt organizations, or by a state, a U. 1040ez 2011 online S. 1040ez 2011 online possession, a political subdivision of a state or possession, the United States, or the District of Columbia. 1040ez 2011 online “Permanently and totally disabled” has the same meaning here as under Qualifying Child, earlier. 1040ez 2011 online Support Test (To Be a Qualifying Relative) To meet this test, you generally must provide more than half of a person's total support during the calendar year. 1040ez 2011 online However, if two or more persons provide support, but no one person provides more than half of a person's total support, see Multiple Support Agreement , later. 1040ez 2011 online How to determine if support test is met. 1040ez 2011 online   You figure whether you have provided more than half of a person's total support by comparing the amount you contributed to that person's support with the entire amount of support that person received from all sources. 1040ez 2011 online This includes support the person provided from his or her own funds. 1040ez 2011 online   You may find Worksheet 3-1 helpful in figuring whether you provided more than half of a person's support. 1040ez 2011 online Person's own funds not used for support. 1040ez 2011 online   A person's own funds are not support unless they are actually spent for support. 1040ez 2011 online Example. 1040ez 2011 online Your mother received $2,400 in social security benefits and $300 in interest. 1040ez 2011 online She paid $2,000 for lodging and $400 for recreation. 1040ez 2011 online She put $300 in a savings account. 1040ez 2011 online Even though your mother received a total of $2,700 ($2,400 + $300), she spent only $2,400 ($2,000 + $400) for her own support. 1040ez 2011 online If you spent more than $2,400 for her support and no other support was received, you have provided more than half of her support. 1040ez 2011 online Child's wages used for own support. 1040ez 2011 online   You cannot include in your contribution to your child's support any support paid for by the child with the child's own wages, even if you paid the wages. 1040ez 2011 online Year support is provided. 1040ez 2011 online   The year you provide the support is the year you pay for it, even if you do so with borrowed money that you repay in a later year. 1040ez 2011 online   If you use a fiscal year to report your income, you must provide more than half of the dependent's support for the calendar year in which your fiscal year begins. 1040ez 2011 online Armed Forces dependency allotments. 1040ez 2011 online   The part of the allotment contributed by the government and the part taken out of your military pay are both considered provided by you in figuring whether you provide more than half of the support. 1040ez 2011 online If your allotment is used to support persons other than those you name, you can take the exemptions for them if they otherwise qualify. 1040ez 2011 online Example. 1040ez 2011 online You are in the Armed Forces. 1040ez 2011 online You authorize an allotment for your widowed mother that she uses to support herself and her sister. 1040ez 2011 online If the allotment provides more than half of each person's support, you can take an exemption for each of them, if they otherwise qualify, even though you authorize the allotment only for your mother. 1040ez 2011 online Tax-exempt military quarters allowances. 1040ez 2011 online   These allowances are treated the same way as dependency allotments in figuring support. 1040ez 2011 online The allotment of pay and the tax-exempt basic allowance for quarters are both considered as provided by you for support. 1040ez 2011 online Tax-exempt income. 1040ez 2011 online   In figuring a person's total support, include tax-exempt income, savings, and borrowed amounts used to support that person. 1040ez 2011 online Tax-exempt income includes certain social security benefits, welfare benefits, nontaxable life insurance proceeds, Armed Forces family allotments, nontaxable pensions, and tax-exempt interest. 1040ez 2011 online Example 1. 1040ez 2011 online You provide $4,000 toward your mother's support during the year. 1040ez 2011 online She has earned income of $600, nontaxable social security benefits of $4,800, and tax-exempt interest of $200. 1040ez 2011 online She uses all these for her support. 1040ez 2011 online You cannot claim an exemption for your mother because the $4,000 you provide is not more than half of her total support of $9,600 ($4,000 + $600 + $4,800 + $200). 1040ez 2011 online Example 2. 1040ez 2011 online Your niece takes out a student loan of $2,500 a