Definition

• A qualifying child is any child or grandchild (or sibling or descendant of a sibling) either under 19 or under 24 but a student. In addition, the person claiming the child as a dependent must have provided more than half of the child's monetary support (money for clothes, food, medical expenses and entertainment) and must have lived with the child for at least half of the tax year.
  
  

Tax Benefits of Claiming a Child

• Claiming a child as a dependent has quite a number of tax benefits. First, the person claiming can add an extra exemption. Secondly, the person claiming can deduct child care and educational expenses spent on the child and may be eligible for the child tax credit, which allows the taxpayer to deduct $1,000 from the amount that he owes in taxes. Additionally, if the taxpayer works, she may be able to claim a higher earned income tax credit for having a dependent child.
  
  

Grandparents

• In many American households, grandparents contribute significantly to raising a child or raise a grandchild with limited help from the child's parents. Grandparents can save a significant amount of money on taxes by claiming the child as a dependent on taxes, if the child meets the Internal Revenue Service's guidelines.
  
  

Parents

• In many households, both parents and grandparents help raise a child. However, only one adult can claim the child. The IRS states that in situations where a child lives with both a parent and grandparent, both adults may be eligible to claim the child (especially if living in the grandparent's house while the parent worked). The IRS recommends having a discussion to determine who contributed what and which adult stands to save more money on taxes by claiming a dependent.