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Here is some good information from Intuit about the dependency rules:
For tax purposes, a dependent is someone “other than the taxpayer or spouse” who qualifies to be claimed by someone else on a tax return. More generally speaking, a dependent is someone who relies on another person for financial support, such as for housing, food, clothing, necessities, and more. Typically, this includes your children or other relatives, but it can also include people who aren’t directly related to you, such as a domestic partner.
Once you identify someone as a dependent on your tax return, you’re informing the IRS that you met the requirements to claim them as a dependent.
For tax years prior to 2018, taxpayers were allowed to reduce their taxable income by a certain amount for each dependent claimed on a tax return. This is known as an exemption deduction. In tax year 2017, it amounted to $4,050 per qualifying dependent. Beginning in 2018, the exemption deduction went away and was replaced by a typically more generous Child Tax Credit or the Other Dependent Credit depending primarily upon the age of the dependent and relationship to the person claiming the dependent. A credit is different from a deduction in that the credit can directly reduce your tax while a deduction can reduce the amount of income that is subject to tax.
If you have a family, you need to know how the IRS defines “dependents” for income tax purposes. Why? Because it could save you thousands of dollars on your taxes.
For tax years prior to 2018, every qualified dependent you claimed could reduce your taxable income by up to the exemption amount, equal to $4,050 in 2017. This could add up to substantial savings on your tax bill.
Beginning in tax year 2018 going through 2020, and again in 2022, exemption deductions were replaced by:
For 2021 only, the Child Tax Credit is expanded by the American Rescue Plan raising the per-child credit to $3,600 or $3,000 depending on the age of the child. The credit is also fully refundable for 2021. To get money into the hands of families faster, the IRS sent out advance payments of the 2021 Child Tax Credit beginning in July of 2021.
The 2022 Other Dependent Credit for qualifying relatives is $500.
Dependent rules also apply to other benefits such as:
Qualifying for these benefits can make the difference between owing money and receiving a refund.
The basic rules aren’t complicated but it can be difficult to apply those rules to certain family situations. That’s especially true if you have a son off at college, a cousin who stays with you during the summer, or a daughter with a part-time job. The questions below will help you decide which relatives you can claim as dependents.
The IRS rules for qualifying dependents cover just about every conceivable situation, from housekeepers to emancipated offspring.
Fortunately, most of us live simpler lives. The basic rules will cover almost everyone. Here’s how it all breaks down.
There are two types of dependents, each subject to different rules:
For both types of dependents, you’ll need to answer the following questions to determine if you can claim them.
TurboTax Tip: The inclusion of qualified dependents on your tax return is one of the best tax benefits available. It can open the door to many tax credits and deductions that can lower your tax bill.
Qualifying child
In addition to the qualifications above, to claim a qualifying child, you must be able to answer "yes" to all of the following questions.
Qualifying relative
Many people provide support to their aging parents. But just because you mail your 78-year-old mother a check every once in a while doesn’t mean you can claim her as a dependent. Here's a checklist for determining whether your mom (or other relative) qualifies.
In all cases, to claim someone as a dependent on your tax return, you can't be claimed as a dependent on someone else’s return.
Married filers with two minor children
If you file jointly with your spouse and have two minor children who don’t earn income and live with you for more than half the year (though some exceptions apply), you can likely claim them as qualifying children dependents on your tax return.
Divorced filers with two minor children
If you are divorced and have a custody agreement in place between you and your ex-spouse for your two children, the person who can claim these children on their tax return will come down to which person can satisfy the criteria provided by the IRS for claiming a dependent child. Typically, the person with whom the children live with over half the year will be able to claim the dependents on their tax return. But there may be a separate legal agreement stipulating the other parent may claim the children as dependents.
Multiple siblings supporting an elderly parent through a multiple support agreement
If multiple adult children are supporting their elderly parent, generally the child who provides more than 50% of their support can claim them as a dependent. However, you can also use a multiple support agreement to determine which sibling can claim the elderly parent on a tax return. Even in this situation, you'll need to contribute a minimum of 10% to their support, but this falls considerably below the standard 50%.
Claiming a domestic partner
You can also claim your domestic partner as a dependent if they meet the requirements set forth in the qualifying relative dependent category. Typically, claiming a domestic partner is a challenge because of the low amount of income the partner can earn before becoming ineligible for being claimed.
How much can a dependent child earn in 2022?
A qualifying child can earn an unlimited amount of money and still be claimed as a dependent, so long as the child doesn’t also provide more than half of his or her own support.
However, if the dependent child is being claimed under the qualifying relative rules, the child’s gross income must be less than $4,400 for the year.
When does your child have to file a tax return?
For 2022, a child typically can have up to $12,950 of earned income without paying income tax. However, self-employment income and unearned income such as that from investments have different thresholds for children to file tax returns.
When should I stop claiming my child as a dependent?
There may come a time when you can no longer claim your child as a dependent. It might be because of their age (your child no longer qualifies if over the age of 18 or 23 if a full-time student), you no longer pay for half their financial support, or they’ve moved out of the house. If you can no longer claim them under the qualifying child dependent rules you might be able to claim them under the qualifying relative tests.
Can you claim adults as dependents on your taxes?
You can claim adults as dependents on your taxes if they meet the criteria for qualifying relatives. Many people care for elderly parents and claim them as a qualifying relative dependent. Likewise, you can claim a domestic partner on your return as a dependent as long as they meet the requirements.
Generally, the biggest hurdle to overcome by claiming an adult as a dependent is the income test. Adult dependents can’t have a gross income of more than $4,400 in 2022. If you follow all the guidelines and the adult meets the criteria, you can claim them as an adult dependent, opening up the opportunity to claim additional tax deductions and credits to lower your tax bill.
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Maybe. If your income in 2022 was less than $4400--not counting any Social Security---and your parents paid for over half your support, they may still claim you as a qualified relative. If you had over $4400 of income, you cannot be claimed. You are too old to be claimed as a qualifed child.
WHO CAN I CLAIM AS A DEPENDENT?
You can claim a child, relative, friend, or fiancé (etc.) as a dependent on your 2022 taxes as long as they meet the following requirements:
Qualifying child
Qualifying relative
When you add someone as a dependent, we'll ask a series of questions to make sure you can claim them. There may be other tax benefits you can get when you claim a dependent.
your too old to be claimed as a qualifying child - you had to be under 24 on 12/31/2022 if a full-time student or under 19 if not.
you could be a qualifying relative (a dependent) if both these tests are met
1) your gross income must be under $4400
2) your parents must provide over 50% of your support
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