Who Qualifies as a Dependent for Tax Purposes?

Who Qualifies as a Dependent?

To assert somebody as your dependent, the individual should be a US citizen, nationwide, or resident alien and have an SSN, ITIN, or ATIN. Along with these common ideas, there are additionally age-specific guidelines dictating who you possibly can declare as your dependent.

Claiming Baby Dependents

With a view to declare somebody as a baby dependent, the next circumstances should be met:

• • It’s essential to pay no less than 50% of the kid’s help or bills.
  • The kid should be below 19 years previous.
  • The kid should be youthful than you.

Exceptions to those guidelines embrace:

• • Chances are you’ll declare a baby as much as 24 years previous if they’re a full-time scholar and attended faculty for no less than 5 months of that yr.
  • You’ll be able to declare a baby as a dependent no matter their age if they’re completely and completely

Claiming Grownup Dependents

The rules for claiming an grownup as a dependent are similar to claiming a baby dependent and embrace:

• • You and the grownup should be a qualifying relationship.
  • It’s essential to pay for no less than 50% of the grownup’s help and bills.
  • The grownup will need to have both been residing with you for your complete yr or be associated to you.
  • The grownup’s gross revenue can’t exceed $4,150.
  • The grownup can’t be claimed as a dependent by anybody else.

Grownup dependents could embrace siblings, aunts, uncles, in-laws, dad and mom, your home accomplice, or a buddy—so long as they meet these standards.

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Who can declare a dependent?

With a view to declare a dependent, you (the taxpayer) can’t qualify as a dependent of one other taxpayer. Your potential dependent(s) should additionally meet the foundations for Qualifying Baby or Qualifying Relative.

The Two Sorts of Qualifying Tax Dependents

Kids and kinfolk can qualify as tax dependents—however their definitions are broader than you might suspect.

Along with your delivery youngster or an adopted youngster, your foster youngster, siblings, half-siblings and step-siblings (together with all of the siblings’ descendants) will be qualifying kids. And your son-in-law, mother-in-law, dad and mom, grandparents and in-laws might all be qualifying kinfolk.

An individual would not even have to be a relative to rely as a qualifying relative. A girlfriend, boyfriend or roommate may very well be your dependent so long as the individual is a member of your family for your complete yr and meets all the opposite necessities.

The IRS’ Publication 17, chapter 3, has an entire record of which relationships can qualify somebody as a baby or relative for dependent functions.

Along with the connection requirement, the qualifying youngster or qualifying relative has to go a sequence of “checks.”

Qualifying Kids

There are 4 checks for qualifying kids:

1. The kid should be 19 or youthful on the finish of the tax yr and youthful than you (and your partner in the event you file a joint return). Qualifying kids will be as much as 24 years previous in the event that they’re additionally full-time college students for no less than 5 months of the yr, or they are often any age in the event that they’re completely and completely disabled.
2. The kid has to reside with you for no less than half the yr. There are exceptions for momentary absences, equivalent to while you or the kid are away from house for college, enterprise, trip or navy service.
3. The kid cannot present greater than half of his or her personal help in the course of the yr (scholarships do not rely as help).
4. The kid cannot file a joint tax return until the one purpose for submitting is to get again the taxes that have been withheld from his or her pay or have been a part of estimated tax funds.

The principles for who can declare a qualifying youngster can get pretty complicated when each dad and mom can declare the kid as a dependent however they are not married, or they file their tax returns utilizing the married submitting individually standing.

Some dad and mom change off, letting one individual declare the kid one yr and the opposite dad or mum declare the kid the following. The IRS additionally has an official sequence of tiebreaker guidelines (see web page 30 of Publication 17) to find out who can declare the kid if you cannot come to an amicable settlement.

Qualifying Family members

There are three further checks in your qualifying kinfolk:

1. The individual cannot be anybody’s qualifying youngster.
2. The individual’s gross revenue should be under $4,150. Revenue might embrace cash, property, items or companies they obtained, and it could embrace Social Safety advantages. Nonetheless, there are exceptions for folks with disabilities who obtained revenue from sure tax-exempt faculties.
3. It’s a must to present greater than half of the individual’s help for the yr.

If working by way of all of the checks sound like an excessive amount of work, you may additionally strive the IRS’ interactive tool, which may help you identify in the event you can declare somebody as a dependent.

The Credit score for Different Dependents

Referred to as the “credit score for different dependents,” that is the extra tax credit score supplied below the TCJA. It was that you may solely declare the child tax credit for every of your minor dependents. They needed to be age 16 or youthful as of the final day of the tax yr.

You’ll be able to nonetheless declare the kid tax credit score in your youthful children, however your 17-plus-year-olds are now not overlooked within the chilly so long as they qualify as your dependents. The TCJA provides the credit for other dependents for these over age 16. The 2021 American Rescue Plan additionally expanded the kid tax credit score to incorporate 17-year-olds (however just for the 2021 tax yr).

Your dependent doesn’t should be your youngster to permit you to declare this credit score. They are often your dad or mum, sibling, or cousin—or not even associated to you in any respect. They need to meet all the opposite IRS qualifying guidelines for grownup dependents, nonetheless. The credit score is $500 per dependent as of 2021.

How lengthy are you able to declare an grownup youngster as a dependent?

There isn’t a age restrict for a way lengthy you possibly can claim adult children or other relatives as dependents, however they have to meet different IRS necessities to proceed to qualify. Moreover, as soon as they’re over 18 and now not a scholar, they will solely qualify as an "different dependent," not a qualifying youngster.

When can’t I declare my important different as a dependent?

Even in the event you and your accomplice meet the above {qualifications}, the IRS dependent guidelines embrace a number of caveats that present additional restrictions.

As an illustration, you can not declare your accomplice as a dependent if another person claims her or him as a depending on their tax return. Every dependent can solely be claimed by one taxpayer. In case your important different is claimed by his or her dad and mom, kids, or ex-spouse, you can not declare her or him as a dependent.

Additional, you can not declare your important different as a dependent if she or he shouldn’t be a citizen or resident of the US. Residents of Canada or Mexico additionally qualify.

Sorts of Dependents

Qualifying Baby

Sure checks are used particularly to find out if a dependent is a qualifying youngster or a qualifying relative. To fulfill the IRC relationship test—and be thought-about a qualifying youngster—the kid should be:

• The taxpayer’s son, daughter, stepchild, foster youngster (positioned by a licensed placement company), or a descendant (for instance, a grandchild) of any of them
• The taxpayer’s brother, sister, half-brother, half-sister, stepbrother, stepsister, or a descendant (for instance, niece or nephew) of any of them

To fulfill the IRC age check, the kid should be:

• Underneath age 19 on the finish of the tax yr and youthful than the taxpayer (or the taxpayer’s partner, if submitting collectively)
• A full-time scholar below the age of 24 on the finish of the yr and youthful than the taxpayer (or partner, if submitting collectively)

The ultimate checks to find out if the person qualifies as a qualifying youngster are the resident check and the help check. To fulfill the resident check, the kid will need to have lived with the taxpayer for greater than half of the yr; nonetheless, there are exceptions to this rule.

For instance, if the kid or the taxpayer is briefly absent as a consequence of sickness, schooling, enterprise, trip, navy service, institutionalized care for a kid who’s completely and completely disabled, or incarceration, then the kid continues to be thought-about a part of the residence (residing with the taxpayer) throughout this time.

The help check requires that the kid can’t have supplied greater than half of their very own monetary help in the course of the tax yr.

Chances are you’ll be eligible to file as head of family even when the kid who’s your qualifying individual has been kidnapped. This therapy applies for all years till the yr when there’s a dedication that the kid is lifeless, or the yr when the kid would have reached age 18 (whichever is earlier).

Qualifying Relative

If these checks aren’t met, then the taxpayer could resolve to see if the checks for a qualifying relative are met. These checks are barely totally different and are utilized solely when the checks for a qualifying youngster aren’t met. Not like a qualifying youngster, a qualifying relative will be any age.

A qualifying relative should meet the “not a qualifying youngster” check, the member of family or relationship check, the gross revenue check, and the help check. A toddler can’t be a taxpayer’s qualifying relative if the kid is the taxpayer’s qualifying youngster (or is the qualifying youngster of some other taxpayer).

To fulfill the member of family or relationship check, the individual both should reside as a member of the taxpayer’s family all yr or be associated to the taxpayer. It is very important be aware that an adopted youngster is handled the identical as a pure youngster and that any of those relationships that have been established by marriage aren’t ended by demise or divorce.

To fulfill the gross revenue check, the dependent’s gross revenue for the tax yr should be lower than the edge quantity. This quantity adjustments yearly, however for the 2021 tax yr, the quantity is $4,300 (rising to $4,400 in 2022).

The deduction for private and dependency exemptions is suspended for tax years 2018 by way of 2025 by the Tax Cuts and Jobs Act (TCJA), which was signed into legislation in 2017 by then-President Donald Trump. Though the exemption quantity is zero, the flexibility to say a dependent could make taxpayers eligible for different tax advantages.

Lastly, to fulfill the help check, the taxpayer will need to have supplied greater than 50% of the individual’s complete help for the tax yr. (This help check ought to be differentiated from the one for a qualifying youngster, which checks whether or not the kid supplied greater than half of their very own help for the yr.)

Name SH Block for Assist Claiming Dependents on Your Tax Returns

When you obtained a discover from the IRS disallowing considered one of your dependents, an skilled tax skilled may have the ability to assist. At SH Block, our tax professionals will work with you to speak your inaccurate disallowance to the IRS and resolve the problem with minimal trouble.

Have a novel household scenario? The Tax Court docket is beginning to present some leniency in the direction of non-traditional households and should rule in your favor. Seek the advice of with an SH Block tax lawyer earlier than submitting your taxes to find out the easiest way to say somebody as a dependent to maximise your returns and tax credit.

Contact SH Block by filling out our online form or calling (410) 793-1231 as we speak in your free session.

The content material supplied right here is for informational functions solely and shouldn’t be construed as authorized recommendation on any topic.

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