FAQs for Hurricane Victims - Dependency Exemptions
FAQs for Victims of Hurricanes Katrina, Rita and Wilma, and Victims of the Midwestern Disasters of 2008
(03/09) Q: Are there special rules for dependency exemptions for those affected by Hurricanes Katrina, Rita, and Wilma, and the Midwestern area disasters of 2008?
A: Yes. There are special rules which can affect the age and support tests. See “Tax Relief for Temporary Relocation” on page 12 of Publication 4492, Information for Taxpayers Affected by Hurricanes Katrina, Rita, and Wilma.
The publication states:
You can disregard any assistance received from the government or charitable organizations because you were temporarily relocated as a result of Hurricane Katrina, Rita, or Wilma in determining whether you provided more than one-half of an individual's support.
You can treat as a student an individual who enrolled in school before August 25, 2005, and who is unable to attend classes because of Hurricane Katrina, for each month of the enrollment period that individual is prevented by Hurricane Katrina from attending school as planned.
You can treat as a student an individual who enrolled in school before September 23, 2005, and who is unable to attend classes because of Hurricane Rita, for each month of the enrollment period that individual is prevented by Hurricane Rita from attending school as planned.
You can treat as a student an individual who enrolled in school before October 23, 2005, and who is unable to attend classes because of Hurricane Wilma, for each month of the enrollment period that individual is prevented by Hurricane Wilma from attending school as planned.
There are also special rules for dependency exemptions for taxpayers affected by certain of the Midwestern area disasters. See pages 9, 10 of Publication 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas.
(03/09) Q: What about the residency test? Assume a child changed residency because of the effects of Hurricane Katrina, Wilma or Rita, or certain of the Midwestern area disasters of 2008. As a result of the move, the child did not live with his/her parent(s) for more than half of the year but the child meets all other rules required to be a qualifying child for the parent(s). Are there any special rules for this situation?
A: The change in residency due to the above-mentioned disasters could be considered a “temporary absence.” In general, a child who lives with his or her parent(s) is still considered to live with them during periods of time when the child is temporarily absent due to special circumstances.
Otherwise, the standard residency test rules apply for determining dependency exemptions as set forth in Publication 501, Exemptions, Standard Deduction, and Filing Information.
Note: Because the 2005 hurricanes took place in the latter part of the year, a change in residency following the hurricanes could affect only a maximum four month absence. Therefore the situation described would have to also involve change of residency issues that took place prior to the hurricanes.
(03/09) Q: Is there a special exemption for people who provided housing to individuals displaced by the Hurricane Katrina or the Midwestern area disasters of 2008?
A: Yes. There is an additional exemption available for persons who provided housing to individuals displaced by Hurricane Katrina. An additional exemption amount of $500 is available for providing housing in your main home for each displaced individual. The housing must be provided free of charge and the total additional exemptions for 2005 and 2006 cannot exceed $2,000 ($1,000 for married filing separately). Similarly, an additional exemption is available for persons who provided housing to displaced individuals in the Midwestern Disaster Areas.
The additional exemption amount is claimed on Form 8914, Exemption Amount for Taxpayers Housing Midwestern Displaced Individuals (PDF).
For more information, see:
(03/09) Q: A 10-year-old child usually spends the school year with her Mom in Adams County, Wisconsin and summers with grandma in Georgia. In 2008, child spends from January 1 to June 4 with her Mom and then goes to grandma’s home on June 5, with the intent of returning to Wisconsin in August for the 2008-2009 school year. Because the disaster that struck on June 5, 2008, the child stays with Grandma and enrolls at a school in Georgia. Mom stays in Wisconsin to attend to matters at home. As soon as possible in early 2009, Mom and child reunite. Mom’s tax year is the calendar year. May mom claim the child for the EITC and other child-related tax benefits for 2008?
A: Mom may claim child as a qualifying child because, under the facts and circumstances, the continuation of child’s stay with grandma when school started may be considered a temporary absence from child's principal place of abode with mom. Child still is considered to be living with mom during the temporary absence. Child meets the principal place of abode requirement with respect to mom. Child is the qualifying child of mom, for the EITC and other child-related tax benefits for 2008, assuming satisfaction of other applicable requirements.
(03/09) Q: A Mother and her 15-year-old child lived with the Mother's Aunt in Brown County, Indiana from January 1 through June. In July, the Aunt relocated with the child to Maryland, while the Mother remained in Indiana for the rest of 2008. Mother and Aunt each file an income tax return for the calendar year. Who may claim child for EITC purposes, the Mother or the Aunt?
A: Child meets the principal place of abode requirement for both Mother and Aunt, and therefore child is a qualifying child of both. Thus, either the Mother or the Aunt may claim child for EITC purposes, provided other applicable requirements are met. If both claim the child, the tie-breaker rules will apply, and only the Mother will be able to claim the child for EITC purposes.
(03/09) Q: A 5-year-old child, his Grandmother and his Aunt lived together in Adair County, Missouri from January 1 through May. In June, the child evacuated with her Aunt, and the Grandmother went to stay with other relatives. The three were not able to reunite in 2008. Grandmother and Aunt each file an income tax return for the calendar year. Assuming each is otherwise eligible, would both the Aunt and the Grandmother be able to claim child for EITC purposes?
A: Both Grandmother and Aunt lived with child for more than half of the taxable year, so that the principal place of abode requirement is met for child to be the qualifying child of either. Thus, either Grandmother or Aunt may claim child for EITC purposes. If both claim the child, the tie-breaker rules will apply and only the individual with the higher adjusted gross income (AGI) will be able to claim the child for EITC purposes.
(03/09) Q: Parents live with their 20-year-old son, who attended school part-time. As a result of the Midwestern Disasters, son was badly injured and left permanently and totally disabled. The family has applied for Social Security disability benefits, but the final determination has not been made. May the parents claim their son for EITC purposes?
A: If son is permanently and totally disabled, he would meet the age requirement to be a qualifying child. Assuming satisfaction of other applicable requirements, the parents may claim son for EITC purposes. For tax purposes, a doctor must certify disability according to the criteria on page 15 of Publication 596, Earned Income Credit. Certification of disability by the Social Security Administration is not required.
(03/09) Q: A 25-year-old sister and 27-year-old brother living with their 5-year-old niece were each employed and remained together in Calhoun County, Illinois after the Midwestern area disasters through 2008. They now disagree on who should claim the niece for purposes of the EITC. Both are considering claiming the niece on their tax returns. Both sister and brother may find it beneficial to use the option to calculate the EITC based on 2007 earned income. Assuming satisfaction of other applicable requirements, if both claim niece for EITC purposes, which year’s AGI will the IRS use under the tie-breaker rules for purposes of determining which of them is entitled to claim niece for EITC purposes?
A: The IRS will use 2008 AGI for purposes of the tie-breaker rules. The legislation authorizes use of 2007 earned income to determine the EITC and additional child tax credit (ACTC) but does not authorize the use of 2007 AGI for purposes of the tie-breaker rules.
(03/09) Q: The Heartland Tax Relief Act of 2008 specifies that the decision regarding whether to use 2007 earned income to calculate the EITC and ACTC for 2008 must be based on earned income as calculated for the EITC (not ACTC). If a qualified individual who received combat zone pay in 2007 chose not to include it in earned income for her 2007 EITC, may she now choose to include that combat zone pay in her 2007 earned income for purposes of making the comparison to 2008 earned income?
A: When comparing her 2007 earned income with her 2008 earned income, the qualified individual must use the earned income she claimed for 2007. If she wishes, she may amend her 2007 return and calculate her 2007 EITC by including the 2007 combat zone pay in her 2007 earned income. If she does this, she will compare her 2008 earned income with her newly recalculated 2007 earned income.
(03/09) Q: For persons claiming the additional exemption for housing individuals displaced by certain of the Midwestern area disasters, is it mandatory to provide the individual’s social security number (SSN)?
A: Yes. In order to claim the additional exemption, you must complete Form 8914, Exemption Amount for Taxpayers Housing Midwestern Displaced Individuals (PDF), Exemption Amount for Taxpayers Housing Midwestern Displaced Individuals. Form 8914 requires that you enter the displaced individual’s SSN or an Individual Taxpayer Identification Number (ITIN). The IRS will not allow the additional exemption unless the SSN or ITIN is provided. There is no exception to requirement to provide either the SSN or an ITIN.
Form W-9, Request for Taxpayer Identification Number and Certification, may be given to request an SSN or ITIN from the displaced individual.
(03/09) Q: May a taxpayer qualify for the additional $500 exemption for providing housing to a Midwestern disaster displaced individual, if the individual lives in a trailer on the site of the taxpayer’s principal residence?
A: Yes. Similar to the relief provided with respect to taxpayers providing housing to individuals displaced by Hurricane Katrina, a taxpayer is treated as providing housing to an individual displaced by a Midwestern Area Disaster who lives in a trailer on the site of the taxpayer’s principal residence. The result is the same whether the taxpayer, FEMA, or another person owns the trailer. Thus, if all other requirements of § 302 of the Katrina Emergency Tax Relief Act of 2005 (KETRA) (which was made available to taxpayers affected by the Midwestern Disasters by the Heartland Disaster Tax Relief Act of 2008) are met, the taxpayer may claim the additional $500 exemption. For more information, see Publication 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas.
Under § 302 of KETRA, however, a taxpayer may not claim the additional exemption if the taxpayer receives any amount from any source for providing the housing. For example, a taxpayer may not claim the additional exemption if the taxpayer receives any amount from any source for costs of water or electricity used in the trailer or for allowing the trailer to occupy space on the site of the principal residence.