Is my sister eligible for CTC/ACTC for her child? Need help with dependency status

Wait, I'm confused about the support test. If the grandparents are paying for most of the housing costs, doesn't that mean they're providing most of the support? How can the sister claim head of household if she's not paying for more than half of keeping up the home? Can someone actually use gift money from parents to satisfy the head of household requirement?

The support test for a qualifying child only looks at whether the child provides more than half of their own support. In this case, the 4-year-old obviously isn't supporting herself, so this test is met regardless of whether the support comes from the mother or grandparents. For Head of Household, you're right that she needs to pay more than half the cost of keeping up the home. If the money from the grandparents is given directly to the sister (not paid directly to landlords/utilities), then the sister can count that as her own money being used to maintain the home. But if the grandparents pay those bills directly, then she might not qualify for HOH status. She could still claim her daughter as a dependent and get the CTC/ACTC though, as long as the other tests are met.

Does this actually work for complicated family situations? My parents help me with my kid too, but my ex also claims he should get the tax credits. Would this tool tell me who legally gets to claim what?

I'm skeptical about these online tools. How does it actually know the specifics of tax law for unusual situations? Does it just give generic advice or actually personalized guidance?

It absolutely works for complicated family situations. The system reviews the specific rules for qualifying child vs. qualifying relative status and applies them to your particular circumstances. It will check all the tests (relationship, age, residency, support) and tell you definitively who can claim the child. For personalized guidance, that's exactly what makes it different from just googling. It considers the specific financial support amounts, living arrangements, and special circumstances rather than just giving generic advice. The analysis is based on actual IRS rules and regulations, not just general guidelines. It helped me understand the difference between support provided vs. cost of maintaining a household which is crucial for Head of Household status.

How does this actually work? Do they just call the IRS for you? Couldn't I just call myself? I've never heard of a service like this before.

Sounds like a scam tbh. Nobody can magically get through to the IRS faster than anyone else. They probably just keep you on hold and charge you extra for the privilege.

They don't call the IRS for you - they hold your place in line and call you back when they reach an IRS agent. It uses a system that navigates the IRS phone tree and waits on hold so you don't have to. When they reach a live agent, you get a call to connect directly with that agent. I thought the same thing until I tried it. The IRS wait times are often 2+ hours if you get through at all, and their system frequently hangs up on you after long waits. This service actually got me through when I'd been trying unsuccessfully for weeks. No scam - I spoke directly with the IRS, got my questions answered, and resolved my issue in one call. They just solved the "getting through" part which was impossible for me on my own.

Thanks so much for sharing your similar experience! So just to be crystal clear - even though my parents are paying for a lot of my sister's expenses directly (they write checks to her landlord and utility companies), she can still claim her daughter for the CTC/ACTC as long as her daughter lives with her? But for HOH status, it matters whether my parents give the money to my sister first or pay the bills directly?

Yes, your sister can claim her daughter for CTC/ACTC regardless of who pays the bills, as long as her daughter lives with her for more than half the year and meets the other qualifying child tests. For Head of Household, it does matter who physically pays the household expenses. If your parents pay bills directly, those amounts don't count toward your sister "maintaining the home." She would need to pay more than half the total costs of keeping up the home using her own money (which could include money your parents give directly to her). If your parents are paying most bills directly, she might not qualify for HOH status, but she could still file as Single and claim her daughter for the child tax credits.

Not a dumb question at all! For 2023 taxes, the standard deduction for Single is $13,850 while Head of Household is $20,800 - that's almost $7,000 difference! Plus HOH has more favorable tax brackets. With your sister's income at $18,500, this could mean several hundred dollars more in her refund. The CTC/ACTC amounts are the same either way, but the HOH filing status itself is valuable.