Who Can You Claim as a Dependent on Your Tax Return?
When you’re filing your taxes, you’ll need to know who you can claim as a dependent on your tax return.
You’ll have to input their information on the front of IRS Form 1040.
Exemptions no longer exist beginning in the tax year 2018.
In short, the deduction for personal and dependency exemptions is repealed for tax years beginning in 2018 through 2025.
This means you won’t get an exemption deduction for each qualifying dependent.
There are other tax benefits such as tax credits or other deductions you can claim if you have qualifying dependents.
Here’s how to figure out whether a child or relative qualifies as a dependent for your tax return.
Use the IRS Dependent Tool
The IRS website has a handy tool to determine if a child or relative is a dependent for your tax return.
The IRS estimates this tool will take 15 minutes to complete from start to finish.
Before using this tool, you’ll need to know:
- Your marital status
- Your relationship to the dependent
- The amount of support provided
- Income information including your Adjusted Gross Income (AGI)
- Whether no person supplies more than half of the support for a dependent
- Terms of any multiple support agreements you may have
Apply the Dependency Tests Yourself
If you don’t feel like using the IRS tool, you can complete the dependency tests yourself.
There are two general categories of dependents you can claim. Your dependents must either be a qualifying child or a qualifying relative.
The below are the main highlights of these tests. This information is helpful to determine if you may qualify to treat a person as a dependent.
The tests provide many more details and examples on the IRS’s website. The IRS’s website is the official version of the test that should be used.
Qualifying Child Dependency Tests
To be considered a qualifying child, the child must meet all five of the tests below.
The child must either be your son, daughter, stepchild, foster child or a descendant of any of them, such as your grandchild.
Alternatively, a qualifying child could be your brother, sister, half brother, half sister, stepbrother, stepsister or a descendant of any of them, such as your niece or nephew.
Adopted children count as your own children but must be lawfully placed with you for legal adoption.
Your child must be under age 19 at the end of the year and younger than you or your spouse if you’re filing a joint tax return.
Another option is your child must be a student under age 24 at the end of the year and younger than you or your spouse if you’re filing a joint tax return.
The other way to qualify under this test is having a permanently and totally disabled child at any time during the year. There is no age limit for this option.
The residency test requires your child to have lived with you for more than half of the year.
There are many exceptions including those for temporary absences, children who were born or died during the year, kidnapped children and children of divorced or separated parents.
The most common exceptions are for temporary absences.
Your child is considered to live with you during periods of time when you or you and your child were temporarily absent due to special circumstances including:
- Military service
- Detention in a juvenile facility
For divorced or separated parents, the custodial parent usually claims the dependent.
There is a four-part test that may allow the non-custodial parent to claim the dependent. Consult with a tax professional in these cases.
The support test states the child cannot provide more than half of his or her support during the year and still qualify as a dependent.
Support is considered only by the amount contributed for the year for the individual. It doesn’t include funds a person holds unless they were actually spent on support.
You can use IRS worksheet 2 to help you make this decision.
Joint return test
Your child must not file a joint tax return for the year to qualify as your dependent.
There is an exception if your child and his or her spouse file a joint return only to claim a refund of income tax withheld or estimated tax paid.
Qualifying Relative Dependency Tests
A qualifying relative must meet all four tests below to qualify as a dependent.
Not a qualifying child test
A child is not a qualifying relative if:
- The child is your qualifying child or
- The child is a qualifying child of any other taxpayer
If your relative does not meet either of the above conditions, you pass this part of the test.
Member of household or relationship test
The person must live with you all year as a member of your household. Alternatively, the person may be related to you and not have lived with you if they meet the following classifications:
- Your child, stepchild, foster child or a descendant of any of them such as your grandchild.
- Your brother, sister, half brother, half sister, stepbrother or stepsister
- Your father, mother, grandparent or other direct ancestors, but not a foster parent
- Your stepfather or stepmother
- A son or daughter of your brother, sister, half brother, half sister
- A brother or sister of your father or mother
- Your son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law or sister-in-law
If you file a joint tax return, the relationship can be established either by yourself or your spouse.
These relationship classifications continue even after death or divorce if they were established by marriage at any point.
Gross income test
As of 2022, a person’s gross income must be less than $4,400 to qualify as a qualifying relative.
Gross income is defined as all income in the form of money, property and services that isn’t exempt from tax.
Income for services performed at a sheltered workshop is not included in gross income of a person that is permanently and totally disabled at any time during the year.
A sheltered workshop is considered a school that provides both special instruction or training designed to alleviate the disability of the individual and is operated by certain tax-exempt organizations or other qualifying organizations.
You must provide more than half of a person’s total support during the calendar year.
You can use IRS worksheet 2 to help you make this decision.
If you don’t provide more than half of a person’s total support but multiple people provide support totaling more than half of the person’s total support, you may be able to still claim the person as a qualifying relative under a multiple support agreement.
See the IRS’s website for more details about multiple support agreements.
How Dependents Affect Your Taxes
Dependents can help you qualify for certain tax breaks that can lower the amount of tax you’ll end up owing.
In particular, a dependent may allow you to qualify for the following tax benefits depending on your circumstances:
- Child tax credit
- Credit for other dependents
- Earned income tax credit
- Child and dependent care tax credit
- American opportunity tax credit
- Lifetime learning tax credit
- Health coverage tax credit
In the past, you would have been able to take a deduction called an exemption for each dependent on your tax return.
In 2017, this was worth $4,050 per dependent.
Sadly, the new tax law changes got rid of exemptions. Other tax factors also changed that may offset the loss of exemptions depending on your particular situation.
For instance, the child tax credit is now larger and the standard deduction has been increased compared to past years.
What Happens When Dependents File Their Tax Returns?
If you list a person as a dependent on your tax return, it changes how they will file their tax return.
When a dependent files a tax return, they’ll have to check the box that states “Someone can claim you as a dependent”.
Then, when filling out Line 8 on Form 1040, the dependent will have to calculate their standard deduction.
They can do this using the Standard Deduction Worksheet for Dependents - Line 8 found in Form 1040 Instructions on page 35.
If a dependent is not blind or born before January 2, 1954, their standard deduction will be one of the following:
- If you have less than $700 of earned income, your standard deduction will be $1,150
- If you have greater than $700 of earned income, your standard deduction will be the lesser of your earned income plus $400 or the typical standard deduction based on your filing status.
Confused? Use Tax Software or Consult a Tax Pro
Tax rules are constantly changing and can be very complex.
You should always consult with a tax professional or use tax preparation software to help you correctly fill out your tax returns.
This includes making decisions about who is or isn’t a dependent.
These professionals or tools have great knowledge of current tax law and can help guide you to properly fill out your tax return.
They should be able to advise whether a person is a dependent or not for your particular situation, as well.