7 Rules for Claiming Dependents on Taxes

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While the most important thing you get from your children is love (and perhaps a carpet covered in glitter), there is a more mundane benefit to starting a family: Taxes. 

You can save thousands of dollars on your taxes by claiming your dependents on your taxes. And this applies not only to the little love bunnies and their glitter bombs, but also to other relatives like Great Aunt Ethel. 

It’s worthwhile to get familiar with rules that govern who you can claim as a dependent on taxes and how to do so. 

Why You Should Claim Qualifying Dependents on Your Taxes

Why should you bother claiming people on your return? It’s simple: Claiming someone as a dependent on your taxes will save you money.

You don’t want to leave the Child Tax Credit, the Additional Child Tax Credit, or the Child and Dependent Care Credit on the table, after all. For dependents other than children, you’ll want to claim the Credit for Other Dependents. Dependents also have a bearing on your Earned Income Tax Credit and some of the itemized deductions you can claim, such as medical expenses.

All those credits and deductions could be the difference between having to pay in April and receiving a nice little refund. 

Who Qualifies as a Dependent?

According to IRS rules, “qualifying dependents” fit into two categories: qualifying child and qualifying relative. 

The be a qualifying child, an individual must pass five tests:

  1. Relationship: The dependent must be your son, daughter, stepchild, foster child, or a descendant of any of them; your brother, sister, half -brother, half-sister, stepbrother, stepsister, or a descendant of any of them; your adopted child; or your foster child.
  2. Age: The child must be under age 19 (or under 24 if a student) at the end of the tax filing year, as well as younger than you (and your spouse if filing jointly). If the child is permanently and totally disabled at any time during the year, their age does not matter. 
  3. Residency: The child needs to have lived with you for more than half the year, except in some cases such as temporary absences, death, birth, kidnapping, and divorce. In cases of divorce or separation, the custodial parent generally gets to claim the child as a dependent.
  4. Support: The child must have depended on you for at least half of his or her support throughout the year.
  5. Joint return: The child must not file a joint return for the tax year.

A qualifying relative must pass four tests:

  1. Not a qualifying child: The dependent cannot be your qualifying child or the qualifying child of another taxpayer.
  2. Member of household or relationship: The dependent must live with you all year as a member of your household or be related to you in one of various ways if they don’t live with you, but the person cannot have been your spouse at any time during the year. 
  3. Gross income: The dependent’s gross income for the year must fall below $4,300.
  4. Support: The person must have depended on you for at least half of his or her support throughout the year.

Still not sure? Use the IRS Interactive Tax Assistant (ITA)  to determine who you can claim as a dependent. Or check our list of rules below. 

7 Rules for Claiming Dependents on Your Tax Return

It can be hard to make sense of all the picky qualifications in the lists above. So check out these seven rules to help you figure out if you have a qualifying dependent on your hands:

  1. A dependent child must be part of your family. It’s simple: The individual needs to be a part of your immediate family or a descendent of your immediate family.
  2. A dependent relative doesn’t have to be part of your family. Someone who isn’t related to you can qualify as a dependent if they live with you as part of your household throughout the tax year. 
  3. Age only matters for non-disabled dependent children. Kids below 19 can qualify whether they’re a student or not, and they can keep qualifying until 24 if they’re a student. A totally disabled child can qualify regardless of age. Age also doesn’t matter for dependent relatives who are not your children.
  4. The dependent might have to live with you. This rule has a lot of exceptions. A qualifying child must live with you for at least half the year except in a variety of circumstances, such as if the kid was born in November or spent time at college. A qualifying relative dependent must live with you unless they are a member of your immediate family such as your brother, niece, or son-in-law.
  5. You must provide the majority of the person’s support. Whether the dependent is a child or another relative, you have to be responsible for at least 50 percent of their support in the tax year, including not only housing but also food, medical and dental care, clothing, recreation, and other necessities. 
  6. They may have some income. The income of a dependent relative for the tax year must be below $4,300. Dependent children can make income that constitutes up to half of their support, but may need to file their own tax return and pay taxes on it.  
  7. They are your dependent and yours only. You can only claim someone as a dependent if no one else is claiming them on their taxes as well. This rule can be tricky in cases of divorce or separation, and can take some negotiating when spouses file separately, since only one of you can claim your child. 

Examples of Qualifying Relatives

The rules about who is and isn’t a “qualifying relative” can get confusing. After all, they don’t technically have to be your relative. Here are few examples to bring some clarity to the issue:

  • Your adult child: Your adult daughter, 25, is single, unemployed, and has lived with you all year. While she’s too old to qualify as a child, the fact that her income is below $4,200 and you provided more than half of her support makes her a qualifying relative.
  • Your significant other: Your boyfriend lived with you all year and earned $3,500 from a few odd jobs. Since his income was below $4,300 and you provided more than half his support, you can claim him as a dependent.
  • Your boyfriend’s child: The boyfriend’s two-year-old son lived in your house throughout the year while you fully supported him. You can claim the child as your qualifying relative even though he’s not related to you because he lived in your household and you paid for everything he needed.

Can’t I Just Give It the Smell Test?

The last thing you want to see when looking at IRS rules is to “run your info through these five tests.” So it may seem daunting to assess the legitimacy of your potential dependents. But while “test” is the word the IRS uses, maybe you can think of the rules as “signposts on the way to a bigger return.” 

And if you would prefer to get a little help, there’s nothing to worry about: Taxfyle can connect you with an experienced and licensed tax professional to file your taxes. We’re a one-stop online tax service with a deep network of U.S.-based CPAs and EAs who are ready to assist.

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