Deciding if Someone Qualifies as a Dependent on Your Tax Return

By Peoples Tax | March 2, 2020

Deciding if someone qualifies as a dependent on your tax return can be confusing. Let’s first talk about why a taxpayer would want to claim someone else as a dependent.

Well, if you’re helping to care for someone, it can get expensive. Having the ability to claim that person as a dependent on your tax return could save you thousands of dollars on your taxes, and even be the difference between you owing money to the IRS and a getting a refund from the IRS.

If you have young children or other dependents, you might qualify for the Child Tax Credit. This credit reduces your federal income tax bill by up to $2,000 per child for the 2019 tax year.

Who qualifies as a dependent?

There are two types of dependents:

  1. A qualifying child of the taxpayer
  2. A qualifying relative of the taxpayer

A dependent may be either a qualifying child or a qualifying relative. Both types of dependents have unique rules, but some requirements are the same for both.

The tests for qualifying relative are applied only when the tests for qualifying child are not met.

To determine if an individual can be claimed as a dependent, begin with the rules that apply to both qualifying child and qualifying relative:

Dependent Taxpayer Test

  • You can’t claim a person who takes a personal exemption for themselves or claims another dependent on their own tax return.

Joint Return Test

  • A married person who files a joint return cannot be claimed as a dependent unless that joint return is filed only to claim a refund of withheld income tax or estimated tax paid.

Citizen or Resident Test

  • To be claimed as a dependent, a person must be a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico.
  • If a U.S. citizen or U.S. national legally adopts a child who is not a U.S. citizen, U.S. resident alien, or U.S. national, this test is met as long as the child lives with the taxpayer as a member of the household all year. If all other dependency tests are met, the child can be claimed as a dependent. This also applies if the child was lawfully placed with the taxpayer for legal adoption.
  • Foreign exchange students generally are not U.S. residents and do not meet the citizen or resident test; they cannot be claimed as dependents.

Qualifying child – In addition to the three qualifying tests above, to claim an exemption for your child, the following must be true for the child in question.

  1. The child can be your son, daughter, brother, sister, half-brother, half-sister, stepbrother, stepsister, adopted child, stepchild, foster child or a descendant of any of them, such as a grandchild, niece or nephew.
  1. At the end of the filing year, your child must be younger than 19 or, if a full-time student, younger than 24 and younger than you (or your spouse if you are filing a joint return). If your child is permanently and totally disabled, there is no age limit.
  2. The child must have the same main home as you (or your spouse if filing a joint return) in the United States for more than half of the tax year.
  3. The child must not have provided more than half of his or her own support for the year.
  4. The child must not be filing a joint return for the year (unless that joint return is filed only to claim a refund of withheld income tax or estimated tax paid).

IMPORTANT:  Generally, only one person may claim a child as a qualifying child for the child-related tax benefits. If a child is a qualifying child of more than one person and one of the persons is a parent, a non-parent can claim the child if no parent claims the child and the nonparent’s AGI is higher than the AGI of any parent who may claim the child. If a child is the qualifying child of more than one person, the IRS applies tiebreaker rules. Read more about Qualifying Child of More Than One Person here.

Qualifying relative – In addition to the three qualifying tests that any dependent must meet, to claim an exemption for your relative, the following must be true for the relative in question.

  1. The person can’t be your qualifying child or the qualifying child of any other taxpayer.
  2. The person either (a) must be related to you in one of the ways listed under Relatives who don’t have to live with you , or (b) must live with you all year as a member of your household (and your relationship must not violate local law).
  3. The person’s gross income for the year must be less than $4,200.
  4. You must provide more than half of the person’s total support for the year.

We know this is a lot to think about

This is just one of the many things that you might need to think about when you file your tax return each year. At Peoples Tax, we figure all of this out for you. We know the ins and outs of all the tax laws, when things will apply to you, and any tax breaks that might be available for you. Don’t go it alone! We love tax, and stay up-to-date each year, so we can ensure that you are paying the least legitimate amount of tax possible.

Give us a call today at (804) 204-1040 or email us to schedule an appointment! We are available in person in our RVA tax prep offices, or you can meet with one of our RVA tax pros virtually!

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