The Internal Revenue Service has issued guidance on whether a taxpayer can claim a dependency exemption deduction for an unrelated child.

Notice 2008-05 provides guidance under Section 152(d) of the Tax Code for determining whether an individual is a qualifying relative for whom the taxpayer may claim a dependency deduction under Section 151(c). Section 152(d)(1)(D) provides that an individual is not a qualifying relative of the taxpayer if the individual is a qualifying child of any other taxpayer.

The notice clarifies that an individual is not a qualifying child of "any other taxpayer" if the individual's parent (or other person for whom the person is defined as a qualifying child) is not required by Section 6012 to file an income tax return and does not file an income tax return, or files an income tax return solely to obtain a refund of withheld income taxes.

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