The Senate passed by unanimous consent a bill that helps more children leave foster care and join permanent families, while clarifying the definition of a child for tax purposes.
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The House passed the bill last week and it now awaits the president's signature. The Fostering Connections to Success and Increasing Adoptions Act includes provisions subsidizing guardianship payments for relatives, increases the incentives for states to find adoptive parents for children in foster care, and provides adoption assistance to more special-needs children.
For tax purposes, the bill also provides a uniform definition of a qualifying child for the dependency exemption, child credit, dependent care credit, earned income credit and head-of-household filing status, according to a research note by Thomson Reuters/RIA.
"A taxpayer generally may claim an individual who does not meet the uniform definition (with respect to any taxpayer) as a dependent if the dependency requirements are satisfied," wrote RIA. "The uniform definition generally does not modify other parameters of each tax benefit or the rules for determining whether individuals other than children of the taxpayer qualify for each tax benefit."
The bill defines a qualifying child as one who has the same principal residence for more than half the tax year as the taxpayer, has a specified relationship to the taxpayer and has not yet reached a specific age.
The bill also amends Section 152(c) of the Tax Code to provide that a child must be younger than the claimant (absent the existing and continuing exemption for certain disabled individuals) and must be unmarried. Sections 24(a) and 152(c)(4) are also amended to restrict qualifying child tax benefits to a child's parent. The changes apply to taxable years beginning after Dec. 31, 2008.
The age test differs depending upon the tax benefit. Generally, a qualifying child must be younger than 19, or under 24 if a full-time student. Children who provide over half of their own support are generally not considered to qualify as the child of another taxpayer, except for purposes of the earned income credit.