Most taxpayers are well aware of the deduction that comes from claiming dependent children on their taxes. But what are the rules on claiming dependents on taxes? And what about other relatives? And, when can those formerly claimed as dependents on someone else’s return begin to claim themselves?
If someone else can claim you as a dependent, you cannot receive a personal exemption for yourself, and your standard deduction is limited. If you are filing using TurboTax, the program will help you determine the limitations.
You can claim someone as a dependent if they are a United States citizen, do not file a joint return, and meet either the qualifying child test or qualifying relative test, both discussed in IRS Publication 501 and explained below.
The most common reason to claim someone as a dependent on your taxes is because they are a qualifying child. To be a qualifying child, the dependent must meet all six of the following tests:
- Relationship: the dependent must be your child (including foster, step, or adopted child), your sibling (including half or step), or any of their descendants (e.g., your grandchild, niece, or nephew)
- Age: the dependent must be under 19 and younger than you (younger than either you OR your spouse if filing jointly), under 24 and a full-time student for at least part of 5 months of the calendar year, or permanently and totally disabled regardless of age.
- Residency: the dependent must live with you for at least half the calendar year.
- Support: the child cannot have provided more than half of his or her own support (i.e., necessary living expenses) for the year
- Joint Return: the child cannot have filed a joint return with a spouse, except if the return was only filed to claim a refund
- Special Test: if the parents are divorced, only one can claim the child as a qualifying child. If both would be otherwise eligible, this is usually the parent with the highest gross income, unless the parents have agreed otherwise.
If your potential dependent does not qualify as a qualifying child, he may instead be classified as a qualifying relative, and still be claimed as a dependent. To be a qualifying relative, the dependent must meet all of the following tests. Note that there is no age test for a qualifying relative.
- Not a qualifying child: A dependent cannot be deemed your qualifying relative if he is a qualifying child for you or any other taxpayer.
- Relationship: the dependent must live with you OR, if he does not live with you, be your child (including foster, adopted, step, or in-law), your sibling (including half, step, or in-law), your parent or grandparent (including step or in-law but NOT including foster), or a direct descendant of any of the preceding relatives.
- Gross income: the relative’s gross income must be less than $3,700 in 2011. ($3,800 in 2012).
- Support: you must provide more than half of the support for this person during the year. If multiple parties combine to provide more than 50% (e.g., two adult children each provide 30% of a parent’s support), any one taxpayer who provides more than 10% can claim the relative with the written permission of the others.
With the tax deadline just over a week away, it’s important to understand the rules on claiming dependents on taxes and when claiming dependents is appropriate.