If you have a child that is temporarily incarcerated, are you allowed to claim them as a dependent on your federal income tax return?
Section 152(a)(1) permits taxpayers to claim as a dependent any “qualifying child.” Section 152(c)(1)(A)-(E) defines a “qualifying child” as a child of the taxpayer, under the age of 19 or under the age of 24 if a “student,” who has not filed a joint income tax return with anyone else, who did not provide more than one-half of their own support, and who has the “same principal place of abode” as the parent claiming them.
The focus here is on having the same principal place of abode. What does that mean? Well, it’s not actually defined anywhere in the statute, so that means we have to look to Treasury Regulations for guidance.
Regulations explain that a “nonpermanent failure to occupy the common abode… shall be considered temporary absence due to special circumstances.” However, the specifically stated exceptions are illness, education, business, vacation, military service, or family custody agreement. Regulations never said those were the only exceptions; it merely provided examples of special circumstances. Incarceration is certainly a nonpermanent failure to occupy the same abode due to special circumstances.
Haywood v. Commissioner
In Haywood v. Commissioner, the U.S. Tax Court was faced with this specific question. However, the court incorrectly applied the law. First, the court incorrectly stated that the term “dependent means certain individuals over half of whose support was received from the taxpayer during the taxable year in which such individuals are claimed as dependents.” That’s patently and verifiably false. Section 152(c)(1)(D) specifically states that a dependent is one “who has not provided over one-half of such individual’s own support.” The individual cannot have provided more than one-half of their own support. The Court went even further by claiming that because “support provided to [dependenet] by the State prison system where he was incarcerated far exceeded the monetary amounts provided by” his mother, she could not claim him.
In defense of the ill-informed judge, the one-half support rule is only for “qualifying relatives” under Section 152(d)(1)(C): “qualifying relative means... taxpayer provides over one-half of the individual’s support for the calendar year.”
I doubt this U.S. Tax Court Judge would qualify as a member of my firm’s research staff.
It is our firm’s position that an incarcerated child, despite being temporarily absent from the abode due to special circumstances, maintains the same principal place of abode as any parent claiming said child.
However, this is an issue for which the IRS will likely challenge your claim, so we strongly recommend having our firm handle your federal income tax return.