The end of the year brings about an inevitable round of questions regarding tax returns, especially what is (and isn’t) legal to claim. One potentially thorny question is who can be claimed as a dependent. IRS rules cover almost every conceivable scenario, including housekeepers. That’s beyond the scope of this article. Still, we will get into some fundamentals surrounding relatives as dependents.
Rules for claiming any relative as a dependent
Two categories of dependents are covered here: qualifying children and qualifying relatives. Naturally, there are differences in qualifications, but there are a few common denominators.
First, any relative must be a U.S. citizen, U.S. national, or resident of the U.S., Canada, or Mexico. Also, you can’t claim someone already listed as a dependent on a different tax return or who takes a personal exemption for themselves, nor can you claim someone who lists another person as a dependent on their own tax return. Finally, you can’t claim someone who is married and files a joint tax return. One exception to this rule is if the person in question filed a joint return only to claim a refund of income tax withheld or estimated tax paid. In that case, they may be eligible. Still, it’s best to consult a CPA on these scenarios.
Now, let’s look at claiming children as dependents.
Qualifying a child as a dependent
Qualifying a child as a dependent comes down to four factors in addition to the ones listed earlier. Those factors are relationship, age, residency, and financial support.
The child must be related to you, but there are some caveats. Of course, they can be a son or daughter, but they can also be a stepchild, eligible foster child, sibling, half-sibling, stepsibling, adopted child, or offspring of any of them.
As for age, the law is clear. The child must also be under 19 at the end of the calendar year unless they are a student, then the age bumps up to 24. If the dependent is totally and permanently disabled, no age requirement exists.
Then there is a matter of residency. Roughly speaking, the child must live with you for more than half the year, but several exceptions apply.
Finally, the child must not have provided more than half their own financial support for the year.
Qualifying a relative as a dependent
That takes care of children, but what about other relatives?
First, they can’t be the qualifying child of another taxpayer. They must also live with you all year or be in Publication 501 on the list of relatives who do not live with you.
Finally, their gross income, not including Social Security, must have been less than $4,400 for the year. You must also provide more than half their financial support for the year.
Final thoughts on claiming dependents on tax returns
If your situation is straightforward, following the rules outlined here should serve you relatively well. Still, if there is any ambiguity, consult with a CPA. Also, take some time to research the links listed here to see if they generate any questions.
Like many tax returns, deciding factors may be in the details. A few minutes of research and a phone call to a tax expert could make a significant difference in yours.