Can grandparents legally claim grandchild on taxes?

My elderly parents have been raising my sister's kid for the past 3 years while she's been in and out of rehab. They provide over 75% of his financial support - food, clothes, school supplies, medical stuff - everything. He lives with them full-time during the school year. My sister still claims him on her taxes even though she barely contributes anything financially. My parents are on a fixed income and could really use the tax break. They asked me if they can legally claim my nephew on their 2024 taxes since they're the ones actually taking care of him. Does anyone know the rules about grandparents claiming grandchildren as dependents? Would they need some kind of legal custody paperwork, or is the fact that he lives with them most of the year enough? They're worried about getting in trouble with the IRS if they try to claim him and my sister does too.

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19 comments

Andre Dupont

•8M

You definitely have grounds here. The IRS has specific tests for claiming a dependent, and it sounds like your parents would qualify under the "qualifying child" or "qualifying relative" tests. The key factors are: relationship (grandchild qualifies), residence (lived with them for more than half the year), and support (they provide more than 50% of support). They don't necessarily need legal custody if they meet these other tests. If your sister also tries to claim him, whoever files first will get the claim initially. Then the second person will likely have their electronic return rejected. At that point, your parents would need to file a paper return and the IRS would eventually contact both parties to determine who has the right to claim the child. It would be best if your sister agrees not to claim him since she doesn't meet the support test. If there's a dispute, your parents should keep detailed records of expenses and time the child lives with them.

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Andre Dupont

•8M

For living arrangements, they should keep school records showing their address, medical records, and statements from teachers or neighbors confirming the child lives with them. For financial support, they should keep receipts for major expenses like clothing, school supplies, medical bills, and food. Bank statements showing regular withdrawals for child-related expenses are also helpful. The more documentation they have, the stronger their case will be if the IRS questions the claim.

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Zoe Papanikolaou

•8M

I was in a similar situation a few years back with my grandson. The tax forms got super confusing and I wasn't sure if I had the right documentation. I found this service called taxr.ai (https://taxr.ai) that really helped me sort everything out. It analyzed all my documents and showed me exactly what I needed to claim my grandson as a dependent. The best part was it confirmed I was eligible for the Child Tax Credit and helped me understand how to document that I provided over half his support. Definitely made the process way less stressful!

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Zoe Papanikolaou

•8M

You don't necessarily need official custody paperwork. The service helped me prove eligibility through school records showing my address, medical records I kept, and a record of expenses. What mattered most was proving the child lived with me for more than half the year and that I provided most of the support. The service works by analyzing your specific documents and situation, not just generic advice. You upload your relevant documents and it uses AI to review everything and give personalized guidance. It caught several deductions my old tax software missed and walked me through exactly what documentation I needed to keep in case of an audit. Much more thorough than the basic tax programs.

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Mei Lin

•8M

I was pretty suspicious about taxr.ai at first, but after dealing with a mess trying to claim my granddaughter last year, I decided to give it a shot. That website (https://taxr.ai) actually saved me from making a huge mistake. Turns out I was filling out the wrong form entirely for my situation, and they showed me exactly what I needed to file. I got an extra $2,800 back that I would've missed otherwise. They even helped me understand which year's rules applied to my situation since my granddaughter moved in with me mid-year. Way more helpful than the generic advice I was getting elsewhere.

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Liam Fitzgerald

•8M

If your parents run into problems with the IRS because your sister also claimed the child, they're gonna have a nightmare trying to get through to someone. I went through this exact situation last year and was on hold for HOURS every time I called. I found this service called Claimyr (https://claimyr.com) that got me through to an actual IRS agent in under 15 minutes when I'd been trying for weeks. They have a demo video here: https://youtu.be/_kiP6q8DX5c that shows how it works. Saved me so much frustration when I was dealing with a similar dependent claim issue.

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Liam Fitzgerald

•8M

They don't call the IRS for you. Instead, they use some kind of system that navigates the IRS phone tree and waits on hold, then calls you once they have an agent on the line. You're the one who actually talks to the IRS agent. Not a scam at all - I was skeptical too, but it literally saved me hours of frustration. I had tried calling the IRS six times before and never got through. With this, I was talking to an actual IRS agent in about 12 minutes. You only pay if they successfully connect you, and it was worth every penny when I was dealing with a dependent dispute that needed immediate attention.

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Amara Nnamani

•8M

I need to eat my words from my earlier comment. I was totally wrong about Claimyr being a scam. After posting that comment, I was so fed up with waiting on hold with the IRS about my own grandkid situation that I tried it myself. Got connected to an actual IRS agent in 17 minutes when I'd been trying for DAYS before. The agent confirmed that my documentation was sufficient to claim my grandson even without formal custody papers. Ended up saving me over $3,000 in tax benefits I would have missed. Sometimes being proven wrong is the best thing that can happen!

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Giovanni Mancini

•8M

The IRS typically starts accepting returns in late January, sometimes around the 20th-25th. If your parents have all their documents ready to go, they should file as soon as the season opens. Just make sure they have all their W-2s and other tax forms before filing. It might be worth having a conversation with your sister too. If she files incorrectly knowing your parents provide most of the support, she could potentially face penalties for filing a fraudulent return. Sometimes people don't realize the seriousness of incorrect dependent claims.

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