Rules for Claiming a Dependent on Your Tax Return
Having trouble deciding if your Uncle Jack, Grandma Betty or daughter Joan qualifies as a dependent? Help is on the way. Here's a cheat sheet to quickly assess which of your family members you can claim on your tax return.
If you have a family, you need to know how the IRS defines “dependents” for income tax purposes. Why? Because it could save you thousands of dollars on your taxes. For every qualified dependent you claim, you reduce your 2013 taxable income by $3,900. This can add up to substantial savings on your tax bill.
Dependent rules also apply to other benefits, such as tax credits. Many of these credits are available only if you have qualified dependents. For example, both the child tax credit and the earned-income tax credit rely on these rules.
In addition, the rules help you determine if you can write off dependent daycare expenses, medical expenses, various itemized deductions and most tax credits that involve children or family issues. Qualifying for these benefits can spell the difference between owing money and receiving a refund.
The basic rules aren’t complicated. But it can be difficult to apply those rules to certain family situations. That’s especially true if you have a son off at college, a cousin who stays with you during the summer, or a daughter with a part-time job. The checklist below will help you decide which relatives you can claim as dependents.
The IRS rules for qualifying dependents cover just about every conceivable situation, from housekeepers to emancipated offspring.
Fortunately, most of us live simpler lives. The basic rules will cover almost everyone. Here’s how it all breaks down.
There are two types of dependents, each subject to different rules:
- A qualifying child
- A qualifying relative
For both types of dependents, you’ll need to answer the following questions to determine if you can claim them.
- Are they a citizen or resident? The person must be a U.S. citizen, a U.S. national, a U.S. resident, or a resident of Canada or Mexico. Many people wonder if they can claim a foreign-exchange student who temporarily lives with them. The answer is maybe, but only if they meet this requirement.
- Are you the only person claiming them as a dependent? You can’t claim someone who takes a personal exemption for himself or claims another dependent on his own tax form.
- Are they filing a joint return? You cannot claim someone who is married and files a joint tax return. Say you support your married teenaged son: If he files a joint return with his spouse, you can’t claim him as a dependent.
In addition to the qualifications above, to claim an exemption for your child, you must be able to answer "yes" to all of the following questions.
- Are they related to you? The child can be your son, daughter, stepchild, eligible foster child, brother, sister, half brother, half sister, stepbrother, stepsister, adopted child or an offspring of any of them.
- Do they meet the age requirement? Your child must be under age 19 or, if a full-time student, under age 24. There is no age limit if your child is permanently and totally disabled.
- Do they live with you? Your child must live with you for more than half the year, but several exceptions apply.
- Do you financially support them? Your child may have a job, but that job cannot provide more than half of her support.
- Are you the only person claiming them? This requirement commonly applies to children of divorced parents. Here you must use the “tie breaker rules,” which are found in IRS Publication 501. These rules establish income, parentage and residency requirements for claiming a child.
Many people provide support to their aging parents. But just because you mail your 78-year-old mother a check every once in a while doesn’t mean you can claim her as a dependent. Here is a checklist for determining whether your mom (or other relative) qualifies.
- Do they live with you? Your relative must live at your residence all year or be on the list of “relatives who do not live with you” in Publication 501. About 30 types of relatives are on this list.
- Do they make less than $3,900? Your relative cannot have a gross income of more than $3,900 and be claimed by you as a dependent.
- Do you financially support them? You must provide more than half of your relative’s total support each year.
- Are you the only person claiming them? This means you can’t claim the same person twice, once as a qualifying relative and again as a qualifying child. It also means you can’t claim a relative—say a cousin—if someone else, such as his parents, also claim him.
The deduction for qualified dependents is one of the best tax benefits available. It can open the door to a large number of tax credits and deductions that can lower your tax bill. TurboTax will ask you simple, plain-English questions about your family and will determine for you who qualifies as a dependent on your tax return, so you can be sure you’re getting the biggest refund you deserve.
- Can I claim my child as a dependent if she has a part-time job?
Yes, if you provide more than half of the child’s support and meet other criteria.
- My son will be filing a tax return for his summer job. Can he take the personal exemption if I claim him as a dependent?
No. If you claim an exemption for him on your return, he will not be able to take a personal exemption.
- I support my 67-year-old sister-in-law. Is she qualified to be counted as a dependent on my tax return?
Yes, because sisters-in-law meet the relationship requirement and there is no age limit for qualifying relatives.