A Non-relative Child

• As the term implies, a non-relative child is someone with whom you have no blood relations. According to ProTax.com, if the non-relative child lives with you, you may be able to claim him as a dependent on your income taxes if you are supporting him and he is not already being claimed by someone else. For example, a non-relative child could be the son of a friend who is living with you full time. A child, according to the Internal Revenue Service (IRS), is someone under the age of 19 at the end of the tax year or under the age of 24 if a full-time student.
  
  

Gift Tax Defined

• A gift tax is imposed by the IRS on gifts that exceed $13,000 as of January 2009. Thus, any gift of $13,000 or below to a child that you are not related to is not subject to taxation. A gift above this amount will be taxed, and it is usually the responsibility of the donor to pay it. It's important to note that the $13,000 limit is per taxpayer/per year, so your spouse can give a gift up to the $13,000 limit as well.
  
  

Gift Tax Exemptions

• There are certain monetary gifts that can be exempted from the gift tax. You can give gifts that are used for educational and medical purposes without taxation. These can be to children that you are not related to or anyone else for that matter. There is no limit on the amount of tax-exempt money you can give for this purpose.
  
  

When Should It Be Called a Gift

• A gift, as defined by the IRS, is the offer of cash or goods without the expectation of anything in return. So if you give cash or gifts to a non-related child in return for some service, such as home repair or providing transportation, this does not qualify as a gift. Rather this is a payment and must be treated as such for tax purposes, which means filling out a 1099 form. However, the amount the child earns must be at least $5,000 before it is taxable.