Taxes Tax Credits & Deductions Can You Claim a Tax Deduction for Sending Money to a Child in Prison? By William Perez Updated on January 9, 2023 Reviewed by Ebony J. Howard Reviewed by Ebony J. Howard Ebony Howard is a certified public accountant and a QuickBooks ProAdvisor tax expert. She has been in the accounting, audit, and tax profession for more than 13 years, working with individuals and a variety of companies in the health care, banking, and accounting industries. learn about our financial review board Fact checked by J.R. Duren In This Article View All In This Article Why You Can't Deduct Money You Send To Your Child You May Get a Tax Break If Your Child Is Your Dependent Other Child-Related Tax Benefits Could You Owe an Additional Tax? Frequently Asked Questions (FAQs) Photo: ljubaphoto / Getty Images As a parent of a child who is in prison, you may be wondering if the money you send your child is deductible. In short, you can't deduct that money because of certain IRS rules. However, there's a chance you could get a tax break for your child if they recently went to prison. Learn more about how the deduction works, and if you can deduct gifts you send your child. Key Takeaways Money you give to individuals as a gift is not tax-deductible.The rules for claiming a child or relative in prison as a dependent is subject to stricter rules than if they lived with you.Many child-related tax benefits and deductions are also affected by a family's income distribution when a child is in prison.If you give money in excess of the yearly threshold, you may have to pay gift taxes. Why You Can't Deduct Money You Send To Your Child Money, food, clothing, toys, and other items sent to anyone for any reason and without compensation is usually considered a gift under the tax code. In other words, the IRS doesn't see it as you financially supporting your child. Gifts aren't tax-deductible, which means sending money to your child who is incarcerated isn't deductible, either. Note An exception exists when you give money or other items to your child through a qualified charity. Charitable donations can be included as an itemized deduction on Form 1040 Schedule A. You May Get a Tax Break If Your Child Is Your Dependent You might be eligible to claim your child as a dependent under the qualified child rules if they meet three requirements: They lived with you for more than half the year before going to prisonThey didn't provide more than half of their own financial support during the yearThey were 18 or younger on the last day of the year, provided that they're not a student. If your child is eligible under this scenario, you may benefit at tax time from the dependents you claim. One of those tax breaks may include the child tax credit, which is $2,000 per child in tax year 2022. Note You might normally be able to claim a child as a qualifying relative if they're 19 or older, but this loophole closes if your child is in prison. Qualifying relative rules require that they live with you all year, or that you pay at least half of their support needs if they live elsewhere. While the specific situation of an incarcerated dependent is not mentioned in tax law, there was a Tax Court case in 2002 that addressed this topic. The issue was whether the parent could claim her son as a dependent and as a qualifying child for the Earned Income Tax Credit even though he was in prison all year. The Tax Court reasoned that since the parent did not provide more than half the child's support (and couldn't prove she provided the support she claimed), the parent could not claim the son as a dependent. Furthermore, she couldn't claim him for Earned Income Tax Credit purposes, because the son didn't live with his mother for more than six months of the year. The definition of a dependent has changed since the Tax Court issued this decision in 2002. Under current rules, it can be easier for an incarcerated child to be claimed as a dependent, because the law provides that dependents cannot provide more than half of their own support (rather than that parents must directly pay more than half, which was the rule in 2002). Example of Claiming a Child in Prison as a Dependent Angela, a single parent, has two children, Barbara and Aaron. Both children live with her. Aaron gets in trouble with the law and goes to prison in July. He remains incarcerated for the rest of the year. Angela might be entitled to claim both of her children as dependents on her return, based on this scenario. One of the crucial tests for claiming a child as a dependent is that they must depend on others for more than half of their financial needs throughout the year. Angela can prove that both children lived with her for more than half the year, because Charles wasn't incarcerated until July. Angela can also prove that neither child provided more than half of their own support. Her son in prison is clearly not earning an income and contributing to his own support. In this case, Angela can claim him as a dependent. Other Child-Related Tax Benefits Other child-related tax benefits, such as the head-of-household filing status, the Earned Income Credit, and the Child Tax Credit, all have different eligibility criteria. For example, the head-of-household status requires that a taxpayer pay for more than half of maintaining the child's main home during the year, and that might not be the case if the child were incarcerated. Additionally, married parents can't qualify for head-of-household status. Could You Owe an Additional Tax? Although gifts aren't tax-deductible, they can be taxable under some circumstances—and the gift tax is payable by the donor, not the recipient of the gift. You can give away up to $16,000 per person per year in tax year 2022 and $17,000 in tax year 2023 without having to pay a gift tax. Every dollar you give to a person beyond the limit will be subject to the gift tax, though. However, you can get around this consequence by taking advantage of your lifetime gift tax exemption. In addition to the annual exclusion, you have a lifetime gift exemption of $12.06 million in tax year 2022 and $12.92 million in tax year 2023 that you can chip away at in any year when your gifts would otherwise be subject to the gift tax. This figure keeps pace with inflation and increases in most years. Note Keep in mind that using up your lifetime exemption could affect estate taxes after you die. The more you use up by giving taxable gifts during your lifetime, the less will be available to shield your estate from taxation when you pass your assets on to heirs. Frequently Asked Questions (FAQs) What is a dependent for tax purposes? At the most basic level, a dependent is someone who lives with you, and whom you provide for financially. This is typically a child under the age of 19, or a relative you care for, but, under the tax code, there are many caveats to this rule. Why can't I deduct money I send to a prison inmate? Any money you send is considered a gift, which isn't deductible unless it's sent to a charitable organization. Additionally, since most or all of a prisoner's basic needs are paid for by the prison facility, it's likely the IRS doesn't consider them a dependent. Do I have to pay tax on the money I send my child? Possibly. If you send your child more than the threshold amount in a given year, you will have to pay a gift tax on the excess if you exceed your lifetime exemption amount. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. IRS. "Tax Tips To Help You Determine What Makes a Gift Taxable." IRS. "Charitable Contribution Deductions." IRS. "Publication 501, Dependents, Standard Deduction, and Filing Information." IRS. "Get Ready for Taxes: What's New and What To Consider When Filing in 2023." Court Listener. "Haywood v. Comm'r, 2002 T.C. Memo. 258." IRS. "Publication 501 Exemptions, Standard Deductions, and Filing Information for Use in Preparing 2002 Returns." Page 10. IRS. "Filing Status 3." IRS. "What's New—Estate and Gift Tax."