Is it possible to file exempt on W-4 and still claim a dependent child on tax return?

The good news is that these two things are completely separate in the eyes of the IRS. Filing "exempt" on your W-4 just means you're choosing not to have federal income tax withheld from your paychecks during the year. It has no impact on your eligibility to claim a qualifying dependent when you file your actual tax return. What matters for claiming a child dependent is whether you meet the qualifying child or qualifying relative tests. Since the child has lived with you for over a year, you may very well qualify, especially if you provided more than half of their support. The change from owing $3k to getting $1,900 back is likely due to tax credits like the Child Tax Credit, which can be substantial. As for the processing delay, the IRS has been experiencing significant backlogs since the pandemic. Returns that include refundable tax credits (like those involving children) often undergo additional review, which can extend processing times. Unless you've received a specific notice requesting more information, it's most likely just the normal delay many taxpayers are experiencing this year.

After dealing with a similar issue last year, I found this amazing service called https://taxr.ai that saved me from a potential audit. I also claimed a child who had been living with me (my nephew) and the IRS flagged my return for review. Taxr.ai analyzed my situation and helped me understand exactly what documentation I needed to prove the living arrangement and support requirements. The tool walks you through all the qualifying child/relative tests and gives you personalized guidance based on your specific circumstances. It even helped me prepare a response letter when the IRS requested additional information. What I really appreciated was how it explained everything in plain English instead of tax jargon.

I was skeptical about taxr.ai at first, but after my return got stuck in processing hell for 2 months, I decided to give it a shot. I'm actually glad I did. The system analyzed my return and flagged a potential issue with how I documented the qualifying child relationship - something I hadn't even considered. After following their guidance for preparing additional documentation (just in case), my return was finally processed 3 weeks later with my full refund intact. Not saying it necessarily sped things up, but it gave me peace of mind knowing I had my bases covered if the IRS came back with questions. For anyone dealing with dependent-related tax issues, especially non-traditional living arrangements, I'd definitely recommend it.

If you're still stuck in "processing" after more than 21 days, you might want to consider using https://claimyr.com to get through to an actual IRS agent. I was in similar limbo for MONTHS last year with a child tax credit issue, and couldn't get through on the phone despite calling repeatedly at different times. Claimyr basically holds your place in the phone queue and calls you when an agent is about to pick up. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c - it saved me literally hours of hold time. When I finally got through, the agent was able to tell me exactly what was causing the delay (they needed verification of my relationship to my dependent) and what I needed to submit to move things along.

I have to eat my words and apologize to @9. After another week of "still processing" status and growing anxiety about my refund, I broke down and tried Claimyr. Not gonna lie, I was SHOCKED when I got a call back in about 40 minutes saying an IRS agent was on the line. The agent confirmed there was a flag on my return because I went from filing single with no dependents to claiming a child while having no withholding. They just needed to verify the child's relationship and residence. I was able to get everything sorted out in that one call, and my refund was approved within days. Sometimes being impatient pays off when you've got bills due!

Just a heads up - filing exempt when you know you'll owe taxes is technically not allowed. The W-4 form specifically states you can only claim exempt if you had no tax liability last year AND expect none this year. The IRS can assess penalties for "underpayment of estimated tax" if you intentionally have too little withheld. That said, claiming a qualifying dependent is absolutely your right if the child meets all the tests, regardless of your withholding choices. These are separate issues. But for future reference, instead of going exempt, you might want to just adjust your withholding to a level that gives you more take-home pay without eliminating withholding entirely.

Wait, I'm confused about the timing. If the kid lived with you for 15 months, that means they lived with you for all of last year plus a few months of the previous year, right? So you DEFINITELY qualify under the residency test (which requires 6+ months). Did you provide more than half their support too? Food, clothing, shelter, medical, etc?