Dependents

[delugrnc]

My son has not worked for 2 years because of non-military PTSD (still waiting for a disability decision) and we have paid his bills. He has 2 sons. They do not live with us. Can I get a $500.00 dependent credit for them? The boys are 18 and 11. 

[JohnW152]

No, your grandsons don't qualify you for the $500 Credit for Other Dependents because they didn't live with you more than half the year.

Please see the TurboTax Help article What is the $500 Credit for Other Dependents (“Family Tax Credit”)? for more information.

Note:  The "exceptions" to time lived with you referred to in the article are temporary absences for special circumstances, such as school, vacation, business, medical care, military service, or detention in a juvenile facility, count as time the person lived with you.

[delugrnc]

I received the credit last year - $500 each for my son and 2 grandsons. Based on "qualifying relative" criteria, they seem to meet those criteria: not already claimed by anyone else, US Citizens, no spouse so no joint tax return, did not live with us BUT are related to us, no income is less than $4300 and we provided close to 100% of support. 

Trying to determine if the credit we received last year is impacting any economic impact payments that he may/may not receive

[ThomasM125]

If you claim the individuals as your dependent on your 2020 tax return, then they will not qualify for any stimulus checks. If you don't claim them in 2020, they can file a tax return and should qualify for stimulus payments that they didn't receive because you claimed them last year.

However, if they qualify as dependents, it wouldn't be appropriate for them to file on their own just to get the stimulus check and then go back on as your dependent next year.

[delugrnc]

Please bear with me as I try to understand. I thought that a dependent deduction would  reduce the amount of taxable income (AGI) I need to pay taxes on. If I understand correctly, a dependent tax credit reduces the amount of taxes (my AGI stays the same) I am required to pay, no matter what my tax bracket is?? So in this case, getting the tax credits means basically the same thing as a deduction to the IRS even though they are not claimed as dependents?? 

[JotikaT2]

Not necessarily.

Deductions are used to reduce your Adjusted Gross Income to your taxable income.  Your taxes due are then calculated as a percentage of your taxable income.

Tax credits are a dollar for dollar offset against your tax liability.

There are no longer any dependent deductions (exemptions) allowed on your federal income tax return.  

See the attached for more information on the requirements to claim someone as a dependent on your return.

Who can I claim as a dependent