How to claim a dependent on your tax return

Approving dependent on your tax return can significantly reduce your tax liability and will entitle you to valuable tax benefits. These credits include the Child Tax Credit and the Child and Dependent Care Credit, which reduce your expenses. taxable income. Additionally, claiming a dependent may qualify you as head of the familymore favorable filing status than single feeder.

Before you claim someone as a dependent on your tax return, you must make sure they meet all Internal Revenue Service (IRS) requirements.

Who is tax dependent?

A dependent is generally considered to be someone you support financially and who meets certain IRS criteria. Not everyone you care about qualifies as a dependent.

The IRS allows two types of tax dependents, each with their own set of rules:

• Qualifying children
• Relevant Relatives

Recognizing children as tax dependents

To qualify for child as a dependentthey must meet all six of the following tests:

• Citizenship test: The child must be a U.S. citizen, a U.S. resident alien, a U.S. citizen, or a resident of Canada or Mexico. Adopted children who are not US citizens but live with you for a full year are also eligible.
• Relationship test: An eligible child may be your biological child, a stepchild, a stepchild, or an adopted child. A sibling, stepbrother, half-sibling, or descendant of any of the above (such as a grandchild or nephew) are also eligible.
• Residency test: An eligible child must live with taxpayer for more than six months now. In the event of a temporary absence due to school, vacation, guardianship, illness, military service or business, that child will still meet the residency test.
• Age test: An eligible child must be under 19 years of age, or under 24 years of age if full-time student at least five months a year. For children who are permanently and completely disabled, there is no age limit. Unless the child is permanently and totally disabled, the child must also be younger than you (or your spouse if you are filing a joint return).
• Support test: You must provide more than half of the child’s financial support. If you are trying to claim someone who has a job and partially cares for themselves, you need to make sure you can prove it.
• Joint return test: If the dependent is married and files joint return with a spouse, the dependent is not considered a qualifying child. The only exception to this rule is when the dependent and spouse are not required to file a tax return but are doing so only to obtain a tax return. return the money.

Additional tests for tax benefits

Definite tax benefitslike the Child and Dependent Care Credit or the Child Tax Credit, have additional or modified requirements. For example:

• Child and Dependent Care Credit: The dependent must be under 13 years of age unless permanently or totally disabled. If parents are divorcedThe custodial parent is eligible to receive the child and dependent care credit regardless of whether the noncustodial parent claims the child as a dependent on their tax return.
• Child tax credit: In 2023, the credit will be $2,000 for eligible children under age 17 at the end of the year. Your annual income cannot exceed $200,000 ($400,000 if filing a joint return).
• Earned Income Credit (EIC): To be eligible for the EIC program, a child must pass four basic dependency tests: relationship, residence, age, and joint return. In addition to meeting these four basic tests, the child must have lived with you in the United States for more than six months.

Tiebreaker Rules to Determine Eligible Child

If two taxpayers claim the same child, the IRS uses the following dispute resolution rules to determine who receives benefits:

• If only one taxpayer is the child’s parent, the child will qualify as a child of the parent.
• If both taxpayers are the child’s parents and do not file jointly, the parent with whom the child lived “for the longest period of time during the year” receives the benefit.
• If a child has lived with both parents for the same amount of time, then the parent with the longest adjusted gross income (AGI) states the child.
• If neither taxpayer is the child’s parent, the taxpayer with the highest AGI will claim the benefit.

Recognition of relatives as tax dependents

Some dependents do not qualify as qualifying children but may still meet the IRS qualifying relative rules. In addition to the joint return and citizenship tests, relevant relative must meet the following additional criteria:

• Child Qualification Test: To be a suitable relative, a person cannot be a suitable child for anyone else. In other words, a dependent is a qualified relative only if he or she does so. do not meet the child qualification tests for you or another taxpayer.
• Family member or Relationship test: A qualifying relative may be a child or descendant of a child, sibling, stepbrother, half-brother, descendant of a sibling, parent or stepparent, parent’s ancestor (grandparent, great-grandparent, etc.), uncle or aunt, father-in-law or mother-in-law . These relatives are not required to live with you. Alternatively, a qualifying person may be an individual who resides with the taxpayer for the entire year, regardless of whether that person is related to the taxpayer.
• Gross Income Test: The dependent’s income cannot exceed a certain amount. For tax year 2023, that’s $4,700.
• Support test: For a dependent to qualify as a qualifying relative, the taxpayer must provide more than half of their support. Note the difference between the qualifying relative and the qualifying child support test. In the case of a qualifying child, the taxpayer must prove that dependent (the child) provided half or less than half of his or her support; for a qualified relative, the taxpayer must prove that taxpayer provided more than half of dependent support.

Bottom line

Determining whether you can claim someone as a dependent can be difficult. Qualifying dependents can significantly reduce your taxable income and help you qualify for tax breaks that will lower your overall tax burden. If you are unsure whether someone qualifies, check IRS regulations or contact the IRS for clarification at 1-800-829-1040 or call your local IRS office.