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How to Itemize Taxes When Claiming Dependents

Updated for Tax Year 2019


OVERVIEW

Claiming dependents and itemizing deductions is an effective way to save money on your income taxes. Each dependent you claim allows you to reduce your taxable income by one exemption for tax years prior to 2018 and will allow you to receive a tax credit for tax years beginning in 2018 and beyond. Get a step-by-step overview on how to take advantage of itemizing your taxes when claiming dependents in this article on tax tips.


Overview

With the tax law changes that go into effect in 2018, claiming dependents and itemizing deductions is different but is still an effective way to save money on your income taxes. Prior to 2018, each dependent you claim allows you to reduce your taxable income by the amount of one exemption deduction. For 2017, this amount is $4,050. Additionally, you might be eligible for other credits such as the child tax credit and the additional child tax credit.

Beginning in 2018, each dependent you claim allows you to receive up to a $2,000 child tax credit or a $500 dependent tax credit - both generally higher than before 2018. Whether you receive the child tax credit or the dependent tax credit depends upon the type of dependent and what requirements are met. Since this is a credit, it directly reduces the amount of tax that you owe.

If you itemize your deductions you will be giving up the standard deduction, but you can always choose the one that provides the most tax savings. When you itemize, you can deduct a number of expenses including medical and dental bills, mortgage interest and charitable donations.

Step 1: Form 1040

Use Form 1040 to file your taxes.

Step 2: Dependent Exemptions or Credits

List all dependents you are claiming on the first page of your Form 1040. You will need to enter each dependent's full name, Social Security number and their relationship to you. On the second page of your tax return, you can claim an exemption deduction and any other available child credit (tax years 2017 and earlier); or, an increased child/dependent tax credit (tax years beginning in 2018) for each qualifying dependent you list.

Step 3: Itemize your deductions

Use Schedule A to itemize your deductions. The instructions to the Schedule A list all the types of expenses you can itemize. The schedule requires you to report each of the expense categories. When you complete Schedule A, be aware that each category of expenses may have limitations on the amount you can deduct.

Step 4: Include deductions with tax return

Transfer your total itemized deductions to the second page of your tax return. This amount is subtracted from your adjusted gross income along with any other deduction to arrive at your taxable income. This final income amount is the total that is subject to income tax rates.

Step 5: Reduce your tax by your tax credits

After calculating the amount of tax on your taxable income, you can then reduce your tax by any tax credits that you qualify for. This includes the child tax credit and the dependent tax credit for those that you claim on your return.

Let TurboTax do the hard work for you

The steps above are for calculating your taxes by hand. If you use TurboTax, we’ll just ask you simple questions about things like your income, home and family situation and do all the calculations for you. You don’t need to know anything about dependents or exemptions – we’ll tell you which deductions you qualify for, fill in all the right forms, and help you get the biggest tax refund you deserve.

Things you'll need

• Form 1040
• Schedule A

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