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Legal Guardianship of Unrelated Child

Level 5

I have a client who was given legal guardianship of a child at the end of 2019.

My client did not claim the child in 2019.

The child is 16 years old as of 12/31/2020 and is NOT related to my client.

My client provides 100% of his support, the child lived all of 2020 with my client, and the child has no income at all.

I am trying to determine:

1. How do I list this child in the Relationship Area (Part III) of the Information Worksheet? Choices are: Son? (Does not seem appropriate) Foster Child? Other? None?

2. Does my client get to claim the 1st and 2nd EIP payments under the Recovery Rebate Credit Worksheet?

3. Does the child entitle my client to the Child Tax Credit?

The child's Mother passed away in 2019.

The child's Father is alive but, as noted above, signed away all legal rights to my client as Guardian and does not see the child at all.

Any help pointing me to documents and/or citations that are on point would be greatly appreciated.

Thanks in advance.

 

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10 Replies 10
Level 15

Start here:

If the person is not a dependent in 2020, then they would be entitled to the payment/credit as individual filers or by whoever claims them. That doesn't mean "not being claimed." It means "no longer qualifies as a dependent."

You might want to bookmark these links and read the IRS guidance.

Interactive wizards portal for determining dependency:

https://www.irs.gov/help/ita

And:

https://www.irs.gov/newsroom/economic-impact-payment-information-center-topic-a-eip-eligibility

https://www.irs.gov/coronavirus/second-eip-faqs#Eligibility

One for each EIP.

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Level 5

He does qualify as a dependent of my client. At the very least he is an "Other Dependent".

The issue is if, under legal guardianship, he qualifies as a Qualifying Child or any other classification that allows the EIP and Child Tax Credit to go to my client.

I believe there is a legal distinction between Foster Child and a child under guardianship.

I did not see any language in your links discussing a child who is under "guardianship".

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Level 15

"The issue is if, under legal guardianship, he qualifies as a Qualifying Child or any other classification that allows the EIP and Child Tax Credit to go to my client."

Now that you see how to determine this is a Dependent, you can use the EIP links I gave to use that info for EIP purposes. The same is true for CTC.

"I did not see any language in your links discussing a child who is under "guardianship"."

Guardianship is not the IRS terminology.

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Level 12

Foster child. 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.  [IRS Pub 501]

A foster child is a qualifying child, for purposes of the relationship test.  So the foster parent can claim the child tax credit and the rebate recovery credits.  

Level 15

Foster care and Guardianship are not synonyms. Foster care often includes care payments, and that results in a 1099 being issued. For Foster care examples, your residence will be evaluated, there will be an official agency between you and that child at all times, and you need permission to even take them out of town/State/County. Guardianship and custody are not synonyms, either. There can be legal custody that is not physical custody. But this is not tax regulation; this is child welfare.

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Level 12

That's why I posted the IRS definition of foster child (which, incidentally, comes straight from the Internal Revenue Code, Section 152), which fits the poster's situation.  Just trying to avoid generic answers to specific questions.  

Level 5

So, you are of the belief that the Foster Child definition covers a child under legal guardianship? My client has Guardianship documents not Foster Care docs. They receive absolutely no aid/help/direction/orders from any governmental agency.

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Level 15

"which fits the poster's situation. Just trying to avoid generic answers to specific questions"

Fits? We've had 4 foster children. If that is what this client is doing, they would know this definitively. It's burdensome and arduous to have these kids in the home. It's fun, too.

"My client has Guardianship documents not Foster Care docs. They receive absolutely no aid/help/direction/orders from any governmental agency."

It seems clear nothing here is related to Foster care.

The ITA website has lots of wizards; it's a great portal for tax qualification. And there are lots of resources on the web:

"A Qualifying Relative is a person who meets the IRS requirements to be your dependent for tax purposes. If someone is your Qualifying Relative, then you can claim them as a dependent on your tax return.

Despite the name, an IRS Qualifying Relative does not necessarily have to be related to you.

Simply use the easy step-by-step RELucator tax educator tool below, and you will find out for sure who a qualifying relative is:"

https://www.efile.com/qualifying-relative-child-friend-parent-dependent-exemption-test/

https://ttlc.intuit.com/community/taxes/discussion/can-you-claim-non-blood-relatives-as-dependents/0...

https://apps.irs.gov/app/vita/content/globalmedia/4491_dependency_exemptions.pdf

https://apps.irs.gov/app/vita/content/globalmedia/table_2_dependency_exemption_relative_4012.pdf

https://www.irs.gov/publications/p501

"

  1. The person can't be your qualifying child or the qualifying child of any other taxpayer.

  2. The person either (a) must be related to you in one of the ways listed under Relatives who don't 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).

  3. The person's gross income for the year must be less than $4,300.3

  4. You must provide more than half of the person's total support for the year.4"

 

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Level 12

@qbteachmt "It seems clear nothing here is related to Foster care."

You're right!  And it should also seem clear that the Internal Revenue Code definition of "foster child" has  nothing to do with what you are doing, and it's important to make sure people know the difference. 

Level 12

"Legal guardianship," the term you used,  means you have a court order (or comparable court-issued document) appointing you as guardian.  It doesn't mean that you report to a caseworker who supervises you and makes many decisions for the child.