Friday, October 31, 2008

Tip of the Day

It might be time to amend your dependent eligibility requirements. A new law signed by Pres. Bush this month amends the federal definition of a "qualifying child" for tax purposes, and also is largely used for employers' health and dependent care plans.

Under the Fostering Connections to Success and Increasing Adoptions Act of 2008 -- effective for taxable years beginning after Dec. 31 -- a qualifying child:
* Must be younger than the taxpayer (unless the dependent is totally and permanently disabled).
* Cannot be married and file a joint tax return as a dependent.
* Makes an exception for a child who could be considered the qualifying child of both a parent and a nonparent (for example, a grandparent), as long as neither parent claims the child and the nonparent has a higher adjusted gross income than either parent. (Current law stipulates a qualifying child must be the taxpayer's child, stepchild, sibling or stepsibling or a descendent of such a relative.)

No comments: