Priscilla A Montoya

19-08

On August 9, 2018, the Department issued an assessment to the Taxpayer for personal income tax due for the tax year 2017. The Taxpayer’s income tax return had been adjusted by the Department to disallow two dependent exemptions. On November 3, 2018, the Taxpayer filed a timely protest. The sole issue in this protest was whether the Taxpayer was entitled to claim her two dependent grandchildren on her 2017 return. The Department had denied the dependent exemptions because the dependents had been claimed by the dependents’ mother. Both children had been living with the Taxpayer. The determination of whether a dependent may be claimed on the New Mexico return is made by federal law which considers a qualifying child a dependent. Under the law, to claim a dependent child the Taxpayer must have a certain familial relationship, be under 24 years of age (if a student) and have the same principal place of abode. The child cannot provide more than half his or her own support and cannot file a joint return. All these criteria were met by the Taxpayer and both the dependents under her care. Yet another federal statute states that where two individuals are both claiming the same dependent, only the birth parent should be allowed to claim the child. The Hearing Officer, however, sited a series of decisions which determined that if the birth parent cannot provide more than half the child’s support costs that individual may not claim the dependent, nor may an individual claim the dependent if the child was not residing with them. In this case the Taxpayer’s dependent grandchildren were residing with her and not their mother, nor was the mother providing half their support. Because of these reasons, the Hearing Officer decided that the Taxpayer’s dependent exemptions should be allowed and ordered the assessment abated.