Claiming a dependent on your tax return can make a drastic financial difference in what you owe in taxes, or what is owed to you. Just one child can take $4,050 off your taxable income, and children are not the only people you can claim as dependents. In addition to qualifying children, qualifying relatives are also eligible to be claimed as dependents.
Caring for children and other relatives involves many other expenses, such as medical care, childcare, and deductions involving familial issues. If you have more than one dependent, your savings could be significant.
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Who Can Be a Dependent?
Trying to decipher who can be claimed as a dependent can be tricky. As mentioned, qualifying children and qualifying relatives may be claimed as dependents.
Qualifying Children: In some situations, a child may qualify to be a dependent of more than one person, but only one person can claim the child. The following are five tests that narrow down who should claim the child as their qualifying dependent:
- Relationship Test: A child must be your son, daughter, stepchild, foster child, or a descendant of any of them (for instance, your grandchild). Or, the child must be your brother, sister, half sister, half brother, stepbrother, stepsister, or a descendant of any of them (for instance your nephew or niece). Adopted children who have been placed with you for legal adoption are always treated as your own, as are foster children.
- Age Test: A child must meet one of the following: A child must be under age 19, and younger than you, and if filing jointly, the child must also be younger than your spouse; a child must be a student under age 24 at year’s end and younger than you or your spouse; or the child must be permanently and totally disabled, regardless of age.
- Residency Test: There are many exceptions to this test, and a tax attorney can assist you in determining eligibility. Generally, your child must have lived with you for more than half the year. Exceptions include: temporary absences, children who were born or died during the year, kidnapped children, and children of separated or divorced parents.
- Support Test: The child could not have supported himself or herself for more than half the year.
- Joint Return Test: The child cannot file a joint tax return for the year, but there is an exception that your attorney can discuss with you.
It is not uncommon for a child to meet all five tests to be a qualifying child of more than one person. Although this may be the case, only one person can claim the child as a dependent.
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Qualifying Relative: There are four tests a person must meet in order to be your qualifying relative.
- Not a Qualifying Child Test: If your child is already a qualifying child, he or she cannot be your qualifying relative.
- Member of Household or Relationship Test: The person must either live with you for the entire year, or be related to you as outlined on the IRS website. If this person was your spouse at any point during the year, he or she cannot be your qualifying relative.
- Gross Income Test: The person’s gross income for the year must be less than $4,050.
- Support Test: You must have provided over half of the person’s total support for the year.
You must be able to give the social security number of anyone you are claiming as a dependent. If the person doesn’t have a SSN, you must show the individual taxpayer identification number (ITIN) or adoption taxpayer identification number (ATIN) to the IRS. As with a qualifying child, only one person can claim the dependent, and the dependent cannot file a joint tax return with anyone else.
Do I Need an Attorney?
Tax law is complicated, and if you have any questions regarding who you can claim as a dependent, you should contact a tax attorney. Your lawyer will be able to sift through federal tax laws and advise you on your best options and how to get the most out of your tax return. Additionally, you can claim the cost of consulting a tax professional, as well as the cost of having your taxes professionally prepared.