For many people, filing taxes gets infinitely more complicated when you have children or other family members living with you. This can potentially be a huge benefit for you, as claiming a dependent on your taxes can give you credits and save you money. However, not all family members will qualify as a dependent, and there are some unique rules for the process of claiming a dependent.
There are plenty of different types of people that could be considered a dependent if you support them financially. However, for most people, there are two main types of dependents that we will need to take care of – our children and other relatives that live with us. Regardless of what type of dependent you are claiming, they must be a US citizen, a US resident, or a resident of Canada or Mexico. You also must be the only person claiming them as a dependent – they cannot take a personal exemption on their tax forms, and no one else can claim them as a dependent either. This can get tricky in situations involving divorced parents, so it is important for everyone involved to discuss the situation before filing. The IRS has ‘tie breaker’ rules in this case to help solve this problem.
If you are claiming a child as a dependent, there are a few other rules that you have to take into account. They must be related to you by blood or by marriage. For example, you can claim stepchildren, and you can also claim younger siblings or half-siblings that are dependent on you, or any other child that is related to you through this lineage. They must be either under the age of 19 or a full-time student under the age of 24. They must live with you more than 50% of the time, and your support should make up more than half their income. They can have a part-time job of their own, but they cannot claim a personal exemption for themselves if they file their own tax return.
If you are claiming another type of adult relative as a dependent, there are also rules for this situation. You must provide over half of their financial support for the year, and they must make less than $4,050 on their own. They also must either live with you or qualify for a special exemption as stated by the IRS. You also must be the only person claiming them as a dependent.
If you are eligible to claim someone as a dependent, there are many benefits to doing so. When you claim a dependent, $4,050 of your income is no longer taxable. If you have several children or other people that you support, this can actually add up to huge savings on your taxes. You also may qualify for other tax credits, such as the child tax credit. If you have more questions about how you can get tax relief from your dependents, contact your tax professional today.