The child tax credit (CTC) of $1,000 may be available to grandparents as well and under specific circumstances could be refundable. The qualifying grandchild must be under age 17 and a U.S. citizen or resident alien, and the grandparents must qualify for the dependent exemption.

Can you go to jail for claiming false dependents?

Not only can the IRS impose late charges that come with a claiming a false dependent, the IRS may also impose civil penalties for claiming false dependents. Failing to be honest by claiming a false dependent could result in 3 years of prison and fines up to $250,000.

What are the tax implications of grandparents raising a grandchild?

For married grandparents, adding a grandchild as a dependent will not change the married filing jointly status, which is already the most beneficial tax rate schedule. An unmarried grandparent raising a grandchild, however, would now be able to claim head of household filing status, which offers greater tax savings than filing single.

When to claim your granddaughter as a dependent?

You may claim your granddaughter if she is your Qualifying Child or Qualifying Relative (she likely is not your qualifying relative). You can claim her as a qualifying child if: She lived with you at least 6 months and 1 day in 2016.

How much money can a grandparent give a grandchild?

A grandparent can make a tax-free gift of $14,000 per year for each grandchild. Married grandparents can contribute up to $28,000 per grandchild; known as gift splitting, this strategy requires the filing of a gift tax return even though no tax is due. These amounts are also exempt from any GST implications.

Can a grandparent pay for a granddaughters College?

This exclusion applies to anyone making the tuition payment, and it’s popular with grandparents who want to get some extra money out of their estate without having to file a gift-tax return. To qualify, you must pay the school directly; you can’t give the money to your granddaughter first.