A dependent is a person who relies on you for financial support. The tax code allows certain tax deductions and tax credits for people with dependents to compensate for the costs the taxpayer incurs in supporting these dependents.
That sounds simple, but nothing is ever simple with taxes! There are detailed rules defining who can and cannot be claimed as a dependent. Before claiming anyone as a dependent you should review the rules to see if they fit the qualifications. Consult a tax professional if you have any doubts or questions on who you may claim as a dependent.
Who Can You Claim as a Dependent?
There are three sets of rules that determine who can be claimed as a dependent.
These rules define who can be a dependent on someone else’s tax return and apply to anyone you wish to claim as a dependent, whether child or adult:
- A person cannot be a dependent if they filed a joint tax return for the same year. This rule may be waived if the person filed a tax return only to claim a refund.
- A person cannot be a dependent unless they are a citizen of the US, a US National, or a resident alien.
- A person cannot be a dependent unless they have a taxpayer identification number. A Social Security Number, an Individual Taxpayer Identification Number, or an Adoption Taxpayer Identification Number are all acceptable.
You will apply these rules along with other criteria that apply to specific types of dependents.
Rules for Claiming a Child as a Dependent
These additional rules apply any time you claim a minor as a dependent:
- The child you are claiming must have lived in your household for at least six months of the year. Children who are attending college are exempt from this requirement, as are children in a few other unusual circumstances.
- Only one person can claim any given child as a dependent. If parents are divorced, this is usually the custodial parent, with some exceptions. If you are divorced and sharing custody, be sure to communicate with your ex to decide who will claim the child as a dependent. If both of you claim the same dependent you will trigger an audit and may face penalties.
- The child must be less than 18 years of age at the end of the year, or under 24 if the child is a student. To qualify as a student the child must attend school full-time for at 5 months of the year or more. This requirement may not apply to children that are fully and permanently disabled.
- The child you wish to claim must be less than 18 years old and must be younger than you (or your spouse, if you are filing jointly). Again, disabled children may be exempted.
- The child you wish to claim must be your relative. Your own children or foster children are qualified. A stepchild, sibling, stepbrother, stepsister, or a descendant of any of those may also qualify.
- You must have provided more than half of the child’s financial support during the year.
Rules for Qualifying an Adult as a Dependent
You may also claim an adult as a dependent if they meet these requirements:
- The person you wish to claim as a dependent must be a relative or must have been a member of your household for the entire year.
- The person you are claiming as a dependent must have earned less than $4150 during the year for which you are claiming them.
- The person you are claiming as a dependent can only be claimed as a dependent by you and cannot be eligible to be claimed by anyone else.
- More than half of the person’s financial support for the year must have come from you.
- You can only claim an adult as a dependent if your relationship with the dependent is permitted by local law. In some states, for example, you may not be able to claim a boyfriend or girlfriend as a dependent if they are legally married to someone else.
These rules are detailed and in many cases they have exceptions. Use the IRS Interactive Tax Assistant to help clarify any questions you may have. It’s always a good idea to consult a tax professional to be sure that you’re interpreting the rules correctly.
How Can Claiming Dependents Help You?
Up until 2018, taxpayers could claim a personal exemption of $4050 for each dependent claimed on their tax returns. Each dependent effectively reduced your taxable income by $4050. This exemption was eliminated by the Tax Cuts and Jobs Law in 2017 and starting in 2018 these exemptions could no longer be claimed.
It’s still worth claiming your dependents, as they can qualify you for several other useful exemptions and credits:
- Head of Household Status is used by people who are unmarried or married but living separately who have to support others. You may get a larger standard deduction and more favorable tax brackets if you qualify.
- The Child Tax Credit may qualify you for a credit of up to $2,000 per year. The Credit for Other Dependents offers a similar credit of up to $500 per dependent. You will have to have an income below $200,000 ($400,000 if married and filing jointly) to qualify, and there may be other qualifying criteria.
- The Child and Dependent Care Tax Credit applies if you are paying for childcare or care assistance for a disabled adult dependent so that you can work. You may get credit for 20% to 35% of up to $3000, or up to $6000 for two or more dependents.
- You may be eligible for the Earned Income Credit if your adjusted gross income is below $57,000, depending on your filing status and how many children you have. The credit can be worth from $538 to $6,660 in the 2020 tax year. As always, there are qualifying criteria.
- The Adoption Credit provides credit for up to $14,080 in adoption costs for each adopted child. The credit does not apply to a child of your spouse and may not be available to high-income individuals. Parents of adopted children with special needs may be able to claim the full credit even if their expenses were lower.
Any of these features can get you enough advantages to make it worth claiming your dependents even without the personal exemption. All of these have qualifying rules, so you should do your research carefully before claiming any of them.
The rules governing who you may or may not claim as a dependent are complex and may be confusing, especially for divorced couples sharing custody of children or for people in unconventional living arrangements.
If you are legally able to claim dependents, you may be eligible for significant tax benefits. If you believe that you have dependents, it’s worth the effort to determine whether they are or are not eligible.
Review the rules carefully before claiming anyone as a dependent. If you have any doubts at all about their eligibility, consult a tax professional.