While it may appear to be an easy question, often CPAs are faced with the task of determining whether an individual can be claimed as a dependent on another’s tax return. To begin this process, we must first consider what type of dependent this individual could be.
A qualifying child is an individual who:
- Lives with a taxpayer for more than half the year, excluding temporary absences like school
- Is a child, grandchild, sibling, or a descendant of any such person
- Is under 19 years old at the end of the year, a full-time student under 24 years old, or totally and permanently disabled regardless of age
- Does not provide over one half of their own support
A qualifying child does not need to be biologically related to the taxpayer. An adopted child as well as a foster child, stepchild, and a stepsibling could be considered a qualifying child if all other requirements are met. Other special rules apply for a qualifying child. For example, a qualifying child may not file a joint return for the year if married or be older than either the taxpayer or the taxpayer’s spouse.
A qualifying relative is an individual who:
- Is not the taxpayer’s qualifying child or the qualifying child of another taxpayer
- Is a relative of the taxpayer (such as a parent, aunt, or daughter-in-law) or lives with the taxpayer as a member of the taxpayer’s house for the entire year. A relative of the taxpayer may not have to live with the taxpayer to qualify. (Example – Nursing Home)
- Had less than $4,050 of gross income during the year
- Has more than one half of their support provided by the taxpayer
It is important to note that a taxpayer’s child may be a qualifying relative, if the child does not meet the requirements to be a qualifying child. Additionally, any relationship established by marriage does not dissolve upon death or divorce. Therefore, in-laws and stepchildren could still be qualifying relatives.
Once claimed as a dependent on a taxpayer’s return, a qualifying child or qualifying relative cannot claim their own personal exemption on their tax return.
However, there are always special cases and additional rules may apply to any taxpayer’s situation. Please be sure to discuss dependents with your tax advisor. If you have any further questions or concerns, please feel free to contact our office.