Taxes are complicated. As SweetieJean already indicated, there is a rule that says IF somebody else CAN claim her as a dependent, she
is not allowed to claim her own exemption. If she has sufficient income (usually
more than $6300), she can & should still file taxes; she just doesn’t get her own $4050 exemption (deduction).
Even if she had less, she is allowed to file if she needs to get back income tax withholding.She cannot get back social security
or Medicare tax withholding. If she had enough income, to be negatively impacted by not claiming her own exemption, there's a chance she doesn't qualify as your dependent.
If she has filed a return, claiming herself, she will need to file an amended return, unclaiming herself, so that you can
claim her. You do not need to wait until her amended return is fully processed,
to claim her on your return. But, you cannot e-file. You will have to mail in a
paper return.
There are two types of dependents,
"Qualifying Children"(QC) and standard ("Qualifying
Relative" in IRS parlance even though they don't have to actually be
related). There is no income limit for a QC but there is an age limit, a
relationship test and residence test. Only a QC qualifies a taxpayer for the
Earned Income Credit and the Child Tax Credit. They are interrelated but the
rules are different for each.
.A child closely related to a taxpayer can be a
“Qualifying Child (QC)” dependent, regardless of the child's income, if:
1.
He/she is under age 19, or under 24 if a full time
student for at least 5 months of the year, or
is totally & permanently disabled
2.
He did not provide more than 1/2 his own
support (scholarships are considered third party support and not support provided by the student/child)
3.
He lived with the relative (including temporary
absences, such as being away at college) for more than half the year
4.
He is younger than the relative (not applicable
for a disabled child)
5.
If the
child meets the rules to be a qualifying child of more than one person, you
must be the person entitled to claim the child as a qualifying child (this
essentially means that you have the parent’s permission to claim the child, if the child also lived with the parent more than
half the year)
6.
If the parents of a
child can claim the child as a qualifying child but no parent so claims the
child, no one else can claim the child as a qualifying child unless that
person's adjusted gross income (AGI) is higher than the highest AGI of any of
the child's parents who can claim the child.
A person can still be a Qualifying
relative dependent, if not a Qualifying Child, if he meets the 6 tests for
claiming a dependent:
1. Closely Related OR live
with the taxpayer ALL year
2. His/her gross taxable income for the year must be less than $4,050 (2016)
3. The taxpayer must have
provided more than 1/2 his support
In either case:
4. He must be a US citizen or resident of the US, Canada
or Mexico
5. He must not file a joint
return with his spouse or be claiming a dependent of his own
6. He must not be the
qualifying child of another taxpayer
Reference: https://turbotax.intuit.com/tax-tools/tax-tips/Family/Rules-for-Claiming-a-Dependent-on-Your-Tax-Ret...
