Can I claim any other tax benefits?

Question

Is their any tax benefit(s) by providing 100 percent support to family members?
After a failed marriage and health problems, I agreed to let my sister in law and her 8 year old daughter live with us until they got back on their feet. They had absolutely nothing. No home, no car, no money and a dead beat dad/ex-husband that we can’t locate.
I was happy to be able to help after all it is my wife’s sister and our niece. However, the expense has really taken a toll, increased utilities, food, etc. It has been 1 1/2 yrs and she has had no luck getting decent job and no signs of making progress. I claimed them the first year as dependants on my taxes but it seems I am missing something here. Any additional advise?

Answer 1

You can continue to claim them as dependents. And you could take a child tax credit for your niece, since she could be claimed as your "qualifying child". Depending on your income, you might also be able to claim an earned income credit because of your niece.

If your sis-in-law has gross income over $3400 for the year, you can't claim her as a dependent though - if she has no income, then you can.

If she's still looking for a "decent" job after 1-1/2 years, maybe it's time for her to lower her standards a little on what a "decent" job consists of.

Answer 2

From your description, the sister-in-law is a qualifying relative, but the niece is a qualifying child, assuming they are your dependents. The niece has additional tax benefits such as the Earned Income Credit, Child Tax Credit, Additional Child Tax Credit. Are you sure you are filing her as a qualifying child?

You can also deduct medical expenses for either of these dependents.

I don't know what you mean by "decent" job. If the sister-in-law makes $3,400 or more, you cannot claim her, and you also could not claim the niece of the sister-in-law decided to claim the niece and get the Earned Income Credit.

Answer 3

You may also qualify for the child tax credit for your niece.