Reasons to claim a dependent
Claiming a dependent can offer various financial advantages, including tax deductions, credits, and increased benefits related to healthcare and education. A dependent is someone who relies on you for financial support, such as for housing, food, clothing, and other items so make sure you keep tabs on the financial support you provide with records.
To qualify as a dependent on your tax return each person must meet specific criteria set by the IRS and be either a qualifying child or qualifying relative. There are some situations where you can’t claim a dependent on your tax return. For example if you or your spouse (if filing jointly) can be claimed as a dependent on another tax return you can’t claim any dependents. You also generally can’t claim a person who was married on the last day of the tax year.
Claiming a qualifying child
By claiming your qualifying child, you might unlock awesome tax credits like the Child Tax Credit, which can put some serious cash back in your pocket. Not only does this show your role as their support system, but it also gives your finances a nice boost.
You may be able to claim a qualifying child and qualify for the Child Tax Credit. All of the following will need to be true for your dependent in order for them to qualify:
Must not have filed a joint return to claim any credits. The dependent can file a joint tax return if it was only to get a refund.
Needs to be a US citizen, US resident alien, US national, or resident of Canada.
The dependent is your son, daughter, stepchild, eligible foster child, brother, sister, half brother, half sister, stepbrother, stepsister, adopted child or a child of any of them.
Must meet one of the following age guidelines:
Under age 19 at the end of the year and younger than you.
Under age 24 and a full-time student in school for at least 5 months out of the year.
There's no age limit if your child is permanently and totally disabled.
Must live with you for more than half the year; however, several exceptions apply.
Your child may have a job, but they cannot provide more than half of their own support.
If you have a qualifying child that can be claimed as a dependent by someone else you’ll need to use the tiebreaker rules to determine next steps.
Understanding tiebreaker rules
When two people claim the same child as a dependent, the IRS has some handy tiebreaker rules to settle the score! First, if one claimant is the child’s parent, they get priority—no contest there. If both claimants are parents, the one who lives with the child for the longer period during the year gets the nod. If both parents live equally with the child, the one with the higher adjusted gross income takes the prize. In cases where neither is a parent, the IRS favors the person who provides more financial support for the child. These rules ensure that only one person claims the child, keeping things fair and square. So, if you find yourself in this situation, just remember these guidelines to navigate the tiebreaker and maximize your tax benefits!
Examples of this rule per the IRS can be found here.
Claiming a qualifying child as a noncustodial parent
Claiming a qualifying child as a noncustodial parent can be a bit tricky, but it’s definitely doable! If you don’t have primary custody but want to claim your child as a dependent, the key is getting the custodial parent’s agreement. They need to complete and sign IRS Form 8332, which allows you to claim the child for that tax year. You’ll want to include this form with your tax return and keep a copy for your records.
As a noncustodial parent, you may qualify for tax benefits like the Child Tax Credit, which can really help lighten your tax load. Be aware it doesn’t qualify you for other tax benefits like the earned income credit, dependent care credit, or using the head of household filing status.
Claiming a qualifying relative
To claim someone as your qualifying relative, they must meet specific criteria. First, the individual cannot be your qualifying child or the qualifying child of another taxpayer. You also need to provide more than half of their financial support for the year, and their gross income must be less than $5,050 for 2024. Additionally, they must either live with you or be related to you in certain ways—this includes relationships such as a parent, sibling, grandparent, grandchild, foster child, aunt, uncle, niece, nephew, or even an in-law. Meeting these tests ensures that you can claim the dependent and potentially enjoy valuable tax benefits!
If you’re still unsure about whether a particular person will qualify as a dependent you can use this tool here.
This content is provided for informational purposes only and should not be construed as tax, legal, financial, accounting, or other advice. Rules and regulations vary by location and are subject to change, so please consult with an expert if you need advice specific to you.
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