How To Claim Dependents On Your Tax Return
By: Christian Ortega, Content Writer
You devoted yourself to providing the best for your dependents; time to get a break from your taxes for your efforts.
You can save thousands of dollars on your taxes by claiming your dependents on your taxes. Don’t be mistaken; credit does not just apply to children; it extends to others living in your home who qualify as dependents.
It’s essential to understand the nuances behind dependents and taxes. To help you, we detailed how you can claim dependents on your tax return.
Why you should claim qualifying dependents on your taxes
Claiming someone dependent on your taxes will save you money. After all, you have an opportunity to claim the Child Tax Credit, Additional Child Tax Credit, or the Child and Dependent Care Credit in your return.
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, like medical expenses. All those credits and deductions could be the difference between receiving a hefty refund or owing money to the IRS.
Who qualifies as a dependent?
According to IRS, qualifying dependents fit into two categories: qualifying child and qualifying relative. A qualifying child must meet five prerequisites:
- Relationship: The dependent must be your son, daughter, stepchild, foster child. A qualifying child may also be related to you if they’re a descendant of your brother, sister, half-brother, half-sister, stepbrother, stepsister, adopted child, or foster child.
- Age: The child must be younger than 19 years old, or 24 if they’re a student, at the end of the tax filing year, as well as younger than you. If the child is permanently disabled, their age does not matter.
- 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 divorce or separation, the custodial parent generally gets to claim the child as a dependent.
- Support: The child must have depended on you for half of their support throughout the year.
- Joint return: The child must not file a joint return for the tax year.
A qualifying relative must pass four tests:
- Not a qualifying child: The dependent cannot be your qualifying child or the qualifying child of another taxpayer.
- Member of household or relationship: The dependent must live with you all year as a member of your household or be related to you if they don’t live with you, but the person cannot have been your spouse at any time during the year.
- Gross income: The dependent’s gross income for the year must fall below $4,300.
- Support: The person must have depended on you for at least half of his or her support throughout the year.
7 Rules for Claiming Dependents on Your Tax Return
While the lists served as guidelines for who qualifies as a dependent, we still haven’t had a chance to get into details behind claiming dependents on your tax return.
A qualifying child must live with you for at least half the year except in various 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.
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 disabled child can qualify regardless of age. Age also doesn’t matter for dependent relatives who are not your children.
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% of their support in the tax year, including housing and food, medical and dental care, clothing, recreation, and other necessities. Sure, Jerry Seinfeld would’ve loved to have Kramer listed as a dependent, but remember that unless they’re related to you or lived with you, they’re not dependents in the IRS’ eyes regardless of how much they mooch off you.
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 tax return and pay taxes on it.
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 child, 25, is single, unemployed, and has lived with you all year. While they’re 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 significant other lived with you all year and earned $3,500 from a few odd jobs. Since their income was below $4,300 and you provided more than half their support, you can claim them as a dependent.
- Your significant other’s child: The significant other’s two-year-old child lived in your house throughout the year while you fully supported them. You can claim the child as your qualifying relative even though they’re not related to you because they lived in your household, and you paid for everything they needed.
Filing taxes is an intricate process. It becomes frustrating when it appears to be a rabbit hole of forms, deductions, and numbers. However, it doesn’t need to be. While this blog explains how to claim a dependent on your taxes, a Pro’s help can make the difference.
This tax season, take the stress out of taxes by not doing them. At Taxfyle, we have thousands of Pros across the country who are all qualified to file your taxes for you. We went through the trouble of finding the best accountants in the country to give tax filers like you the relief of knowing that your taxes are filed quickly and correctly this tax season.