How to Claim a Dependent Tax Deduction: Rules and Qualifications

 

In general, you can claim an exemption for any eligible child or family member. If you are a dependent of another taxpayer, you cannot declare anyone else as a dependent.

The eligible child or family member must be a citizen, national of the United States or resident alien or a citizen of Mexico or Canada. A tax break may apply to an adopted child who is not a citizen, citizen or alien. I this article, we’ll show you how to claim a dependent tax deduction and the rules and qualifications of doing so.

The qualifying relative or child cannot file a joint tax return unless the following is true:

The sole purpose of the joint return filing is to request a refund.

There is no return needs other than claiming a refund.

The return is not taxable or has no tax liability.

Rules for a Qualifying Child

If you have an eligible child as a dependent, you can claim certain tax benefits, including:

· Head of household filing statu

· Child tax credit (CTC)

· The child and dependent care credit

· The additional child tax credit

· The earned income tax credit

· Additional personal exemption for each dependent

In addition to the conditions the child must meet to be eligible, there are additional conditions for each tax benefit.

A relative or child is considered your eligible child if they pass four tests.

Relationship - The person must have a relationship with you in one of the following ways:

· Eligible foster child

· Sibling or step-sibling

· Child or step-child

· A descendant of any of the above

Age - at least one of the following conditions must be met:

Under 19 years of age at the end of the tax year and younger than the taxpayer claiming the child

A full-time student under 24 years of age or younger than the taxpayer claiming the child at the end of the tax year

Totally or permanently disabled at any time of the year, regardless of age (possibly older than the taxpayer claiming the child)

Residence - The person must have lived with you for more than half of the tax year.

If the kid was born or died during the year, the child will be assumed to have lived with you for the whole calendar year.

Support- The child must not have made more than half of his own alimony during the year.

If you are separated or divorced from the other parent of the child, or if someone other than you can also claim the child as an eligible child, special rules apply:

If one of the taxpayers is the parent of the child, that taxpayer claims the child.

If more than one of the taxpayers is the child’s parent, the person who has lived with the child the most during the year claims for the child. If the time was the same, the child will be claimed by the parent with the highest adjusted gross income.

If no taxpayer is the child’s parent, the child will be claimed by the taxpayer with the highest adjusted gross income.

Qualifying Relative

You may claim a dependent tax credit of a qualifying relative if the person passes four tests.

1. Not qualifying child test

A child is not your qualifying family member if it is your qualifying child or another taxpayer’s qualifying child. If a child were to be an eligible child except for not passing the residency test, the child could be a qualifying relative. If the child does not live with you, but lives in Canada or Mexico and passes the gross income test and the child support test, they may be a qualifying relative.

2.  Relationship or member of household

One of these guidelines must be true:

The person has lived with you as a member of your household all year.

The person is related to you in one of the following ways:

· Child or stepchild

· Eligible foster child

· Sibling or step-sibling

· A descendant of any of the above

· Direct father (parent, grandparent, step-parent, etc.)

· Nephew or niece

· Sister or brother of your parents

· In-laws

3. Gross income test

The individual must have gross income of less than $ 3,500 per year.

4. Support test

You must offer more than half of the person’s total assistance during the calendar year. You can calculate this by comparing the amount you contributed to that person’s support to the total support the person obtained from all sources, including support the person provided from their own funds.

The support test is applied individually to each individual. For example, when determining your parents’ scores, calculate the support test for each parent separately.

Expenses that are not directly related to a household member should be allocated among the household members.

Support costs include:

· Accommodation

· Food

· Clothing

· Medical and dental care

· Transport

· Education

· Recreation

· The ordinary and necessary cost of living

In conclusion, you can see that you can get a tax credit for having dependents. If you have either a qualifying relative or a qualifying child, you can score some significant tax deduction from this on your federal tax return.