North Dakota Kinship Care Tax Credits and Earned Income Credit

Federal Tax Credits That Apply to Kinship Caregivers

When a grandparent or relative takes over raising a child in North Dakota, several federal tax credits can reduce the household's tax burden — sometimes substantially. These credits do not require legal guardianship in every case, but the rules around who qualifies as a "qualifying child" for tax purposes matter.

Here are the main credits to evaluate.

Child Tax Credit

The Child Tax Credit provides up to $2,200 per qualifying child under age 17 for tax year 2026. To claim it, the child must:

• Live with you for more than half the year
• Be claimed as your dependent; the child must not have provided more than half of their own support
• Have a Social Security number valid for employment (and you or your spouse, if filing jointly, must also have one)
• Not file a joint return other than to claim a refund of withheld or estimated taxes

For kinship caregivers, the critical question is whether the child meets the relationship, age, residency, support, and joint-return tests. A grandchild, niece, nephew, or sibling may qualify even without a court order. The qualifying-child support test asks whether the child provided more than half of their own support; it does not require the caregiver to provide more than half. If more than one person could claim the child, IRS tiebreaker rules determine who may claim the tax benefits; a parent generally has priority over a nonparent.

The refundable portion (Additional Child Tax Credit) may provide a refund even if you owe no federal income tax. For tax year 2026, it is capped at $1,700 per qualifying child and generally requires at least $2,500 in earned income, so it may not apply to a retired caregiver with no earned income.

Earned Income Tax Credit

The EITC is the largest cash-back credit for working families with low to moderate incomes. A grandparent or relative who has earned income (wages, self-employment) and claims a kinship child as a qualifying child can receive substantially more than a single filer without dependents.

Key points for kinship caregivers:

• The child must meet the same residency and relationship tests as the Child Tax Credit
• You must have earned income (Social Security retirement benefits alone do not count as earned income)
• Income limits vary by number of qualifying children — for one child, the 2026 EITC phases out completely at $51,593 for single filers (using the higher of AGI or earned income)
• The credit phases in with earnings, so even a modest part-time income can generate a meaningful refund

Retired grandparents who pick up part-time work while raising a grandchild should check whether the EITC applies to them. Many assume they are too old or too stable to qualify, but the credit is income-based, not age-based.

Child and Dependent Care Credit

If you pay for childcare so you can work or look for work, the federal Child and Dependent Care Credit is a nonrefundable credit based on up to $3,000 in qualifying expenses for one person or $6,000 for two or more. For tax year 2026, the credit rate ranges from 20% to 50%, depending on income. Qualifying expenses may include daycare, before- or after-school programs, and day camps, but not overnight camps.

This credit is separate from North Dakota's Child Care Assistance Program (CCAP). You can receive CCAP subsidies and still claim the federal credit on any remaining out-of-pocket childcare costs.

North Dakota State Tax Considerations

North Dakota's individual income tax is graduated rather than flat; the 2026 rate schedule includes 0%, 1.95%, and 2.5% brackets. The state does not offer a separate state-level kinship care tax credit. Federal credits such as the CTC and EITC reduce federal tax liability; they do not automatically offset North Dakota tax. North Dakota starts its individual income-tax calculation with federal taxable income and applies state-specific adjustments.

If the kinship child receives child-only TANF, that cash benefit is not taxable income for the caregiver or the child and does not need to be reported on any tax return.

What You Need to Claim

To claim tax credits for a kinship child, you will need:

• The child's Social Security number
• Records showing the child lived with you for more than six months of the tax year
• Documentation of your financial support (receipts for food, housing, clothing, medical expenses)
• Childcare expense receipts if claiming the dependent care credit
• Your own W-2 or self-employment records if claiming the EITC

A formal court guardianship order or power of attorney strengthens your documentation but is not always required by the IRS. The IRS applies a "qualifying child" test based on relationship, residency, age, and support — not on legal custody status.

Beyond Tax Season

Tax credits are one part of the financial picture for kinship families in North Dakota. For a complete walkthrough of TANF child-only cash aid, Kinship-ND reimbursement, SNAP, Medicaid, and every other program available — with the application forms and document checklists in one place — see the North Dakota Kinship Financial Help Guide.

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