WHAT IS A DEPENDENT:
This is a question I get asked all the time…Who and what qualifies as a dependent on my tax return?? To help taxpayers navigate this gray area, here are the tests necessary to claim someone as your dependent
First and foremost, whether they are your child or your girlfriend/boyfriend, a dependent is a person other than the taxpayer or spouse who entitles the taxpayer to claim a dependency exemption.
- You cannot claim them if you can be claimed as a dependent by another person.
- They cannot file a joint tax return (in most cases).
- They must be a U.S. citizen, resident alien, national, or a resident of Canada or Mexico.
In order to claim a child as a dependent, these five additional tests must be met:
- Relationship test: Must be your child, adopted child, foster-child, brother or sister, or a descendant of one of these (grandchild or nephew).
- Residency test: Must have the same residence for more than half the year.
- Age test: Must be under age 19 or under 24 and a full-time student for at least 5 months. Can be any age if they are totally and permanently disabled.
- Support test: Must not have provided more than half of their own support during the year.
- Joint support test: The child cannot file a joint return for the year.
The next four tests determine where a relative or sweetheart qualifies as a dependent:
- They are not the “qualifying child” of another taxpayer or your “qualifying child.”
- Gross income: Dependent earns less than $3950 taxable income in 2014
- Total support: You provide more than half of the total support for the year.
- Member of household or relationship: The person must live with you all year as a member of your household or be one of the relatives who doesn’t have to live with you (see IRS Publication 501 for a list of qualifying relatives.)
You can even claim a boyfriend, girlfriend, domestic partner, or friend as a qualifying relative if:
- They are a member of your household the entire year.
- The relationship between you and the dependent does not violate the law, meaning you can’t still be married to someone else. Also check your individual state law, since some states do not allow you to claim a boyfriend or girlfriend as a dependent even if your relationship doesn’t violate the law.
- You meet the other criteria for “qualifying relatives” (gross income and support).
Once you’ve determined who in your life can be claimed as a dependent, be sure to take advantage of the following tax deductions and credits:
• Dependent exemption: Have you been supporting your boyfriend or girlfriend? If he or she meets the above tests, this may entitle you to a deduction of $4,000
• Child tax credit: Depending on your income, you can claim up to $1,000 per qualifying child (>16 years)
• The Child and Dependent Care Tax Credit (CDCTC): This is a tax credit that helps working families pay expenses for the care of children, adult dependents or an incapacitated spouse. Families can claim up to $3,000 in dependent care expenses for one child/dependent and $6,000 for two children/dependents per year. The credit is worth between 20 percent and 35 percent of these expenses, depending on a family’s income. Eligible families with adjusted gross income (AGI) of $15,000 or less can claim 35 percent of these expenses for a maximum potential credit of $2,100. The percentage of expenses a family can claim steadily decreases as income rises, until families with AGI of $43,000 or more reach the minimum claim rate of 20 percent, qualifying for a maximum potential credit of $1,200.