Neville is the child of Frank and Alice. Neville is 16 years old and earns $10,000 from a part-time job. Neville lives at home with his parents, who provide greater than half of his support. Is Neville a qualifying child, a qualifying relative, or neither? And, assuming his parent's are below any applicable AGI limitation, what amount of credit will Neville qualify his parents for?

Question

BlackTom AI · Accepted Answer

We're given a tax question about whether Neville qualifies as a dependent and what credit his parents may claim.
Option 1: 'Qualifying Child eligible for $500 nonchild dependent credit' — This is incorrect. If Neville qualifies as a qualifying child, the applicable credit would be the Child Tax Credit (CTC) of $2,000 per qualifying child, not a $500 nonchild dependent credit. The amount and category do not match the rules for a qualifying child.
Option 2: 'Qualifying Child eligible for $2,000 child tax credit' — This is the correct type of dependent and credit under the given facts. Neville is 16 (under 17), he is the child of the taxpayers, he lives with them, and they provide more than half of his support. He passes the age, relationship, and residence tests for a qualifying child, and there is no gross-income test for a qualifying child, only for a qualifying relative. Since the parents are below the AGI limitation, the full $2,000 per qualifying child credit would be available, subject to phase-outs if applicable.
Option 3: 'Qualifying Relative eligible for $500 nonchild dependent credit' — This is incorrect because Neville appears to be a qualifying child, not a qualifying relative. A qualifying relative would require that Neville either does not meet the qualifying child criteria or that the relative income threshold and other tests be satisfied in a way that makes him a relative dependent rather than a qualifying child. The $500 nonchild dependent credit is not the standard outcome here.
Option 4: 'None of the above (i.e., he is not a qualifying child or relative)' — This is incorrect because the facts align with the qualifying child criteria (age under 17, relationship, residency, and support) rather than with the qualifying relative criteria, so dismissing both categories does not fit the scenario.
In summary, evaluating the conditions: Neville is the child of the taxpayers, is 16 years old (fitting under 17), lives at home, and his parents supply more than half of his support; he therefore qualifies as a qualifying child. Given that, the associated credit for a qualifying child is the child tax credit of $2,000 per child, assuming the parents’ AGI is within the phase-out limits. The other options misapply the category (relative vs. child) or the credit amount, or both.

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