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Can You Claim Your Child with Special Needs as a Dependent?

The answer on the face of it is YES, you can take your child with special needs as a dependent.

For someone to be claimed as a qualifying child, the person must meet four criteria:

Relationship — the person must be your child, step child, adopted child, foster child, brother or sister, or a descendant of one of these (for example, a grandchild or nephew).

Residence — for more than half the year, the person must reside in your home.

Age — the person must be either  (i) under age 19 at the end of the year, (ii) under age 24 and a full-time student for at least five months out of the year, or (iii) any age and totally and permanently disabled.

Support — the person did not provide more than half of his or her own support during the year.

Now, here is where it may get a little more complicated.

Your child has set up a Special Needs Trust which provides support to your child.   The qualifying child must not provide more than half of his or her own support. The Special Needs Trust will be counted as the child supporting him or herself.

For example if the parents spend $24,000 supporting their child and the Special Needs Trust spends $12,000.  The parents will be able to claim the child as a dependent which allows them to take a dependent deduction of $3,900 for 2013 on their federal income tax return.

If you are not sure, I recommend that you seek the services of an experienced tax professional or special needs planner.

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