Child Tax Benefits Can Help You File Smart for Yourself and Your Family

As complicated as all things tax related can be, it is certainly a wise idea to understand the basics of the federal tax system if you are a parent or taking care of a dependent child. By understanding how the rules and regulations governing child tax benefits work, you will be able to make more informed decisions about how you fill out your taxes and as a result, be able to provide more efficiently for those you are trusted with taking care of. The federal government has designed these tax breaks to make matters easier for families, so you should definitely take advantage of all the benefits that your tax professional tells you that you're entitled to. The key aspect of children as they relate to the tax system is understanding the definition of a 'qualifying child'. Set by the Working Families Tax Relief Act of 2004, the basic definition of a qualifying child is fairly easy to understand. Firstly, the relationship with the child is crucial. They must be either your child, stepchild, sibling, stepsibling, foster child or the child of one of those. Whether you are related to the child through biological ties or legal adoption, the relationship counts the same. The residence of the child is also important because they need to reside in your home at least half of the year except in cases where the parents of the child are divorced or separated. Children born in the same year are counted differently, but are still considered to have qualifying residence even if they were born in the last month of the tax year. When it comes to the age of children considered eligible for child tax benefits, things can get tricky. Those under the age of 19 by the end of the tax year qualify, but those who have been attending school full time for at least five months of the past year can be up to 24 years of age and still qualify. Those who are totally and permanently disabled automatically qualify, as well. So long as the child does not provide more than half of their own support during the year, they are considered qualifying. This is, of course, only a brief summary of how to determine whether or not a child is considered qualifying, but once you have understand this concept then you are much better prepared to determine how to claim any child tax benefits you may be eligible for.