One of the easiest way to increase your tax benefits at tax time is to claim a child or eligible adult relative as a dependent. You are entitled to a personal exemption for each qualifying dependent that you claim, which helps put a little extra cash back in your pocket. You may even be able to save some on the amount of tax you owe, as some dependents or a certain age and relationship can reduce your tax liability. By claiming dependents, you may be able to claim the Child Tax Credit, Earned Income Credit, and the Child and Dependent Care Credit. If you are unmarried, but can claim a child as a dependent, you may be eligible to file your return using the Head of Household status, which can be beneficial in many ways.
Who is a Dependent?
The IRS has a distinct set of criteria as to who can qualify as a dependent. In order for a taxpayer to claim a child or an adult relative as a dependent, the following requirements must be met:
- The filing taxpayer cannot be claimed as a dependent on anyone else’s return.
- If the dependent is married, they cannot file a joint return with their spouse unless they did not owe any taxes when filing separately, and are only filing for the purpose of a refund.
- The dependent meets a residency/citizenship tests, meaning they are a citizen of the United States or a resident alien. There are some situations where the dependent can be a resident of Canada or Mexico.
- Each dependent is only entitled to be claimed one time, so they can’t be claimed on another person’s return.
- Dependent children are required to have lived with the taxpayer for over six months of the tax year.
- The person claiming the dependent must have paid over 50% of their support.
It’s important to review all of the IRS requirements for who can be claimed as dependent when it comes to children and relatives. You increase your chance of being audited if you claim the same dependent as another taxpayer. Each credit offered by the government has specific rules about who can be claimed as a dependent. Additional information about each credit is available from the IRS.