What is the $500 Credit for Other Dependents (“Family Tax Credit”)?

by TurboTax•1485• Updated 4 weeks ago

The $500 Credit for Other Dependents (aka “Family Tax Credit”) was signed into law as part of the 2017 Tax Cuts and Jobs Act and is in effect for tax years 2018 through 2025.

The credit allows taxpayers a credit for certain dependents that don't qualify for the Child Tax Credit, such as qualifying children age 17 or older, adult dependents, and dependents who have an Individual Taxpayer Identification Number (ITIN).

To be eligible for this credit, the person(s) being claimed must fit the definition of a qualifying child or a qualifying relative, as defined here:

Qualifying child

They are your biological child, stepchild, adopted child, eligible foster child, sibling or half-sibling, stepsibling, or an offspring of any of these.
They haven’t already been claimed for the Child Tax Credit or Credit for Other Dependents, either by you or by anyone else.
They have an Social Security number (SSN), ITIN, or adoption taxpayer identification number (ATIN) issued on or before the due date of your return (including extensions).
They are a US citizen, US resident alien, or US national.
They aren’t filing a joint return with their spouse.
They are under the age of 19 (24 for full-time students; no age limit for permanently and totally disabled children).
They live with you for more than half the year (exceptions apply).
They didn't provide more than half of their own support for the year.

Qualifying relative

Despite the name, a qualifying relative doesn’t have to be related to you. However, a nonrelative must have lived with you for the entire year.

On the other hand, a true relative isn’t required to live with you the entire year, as long as they are your:

Biological child, stepchild, adopted child, foster child, sibling, half-sibling, stepsibling, or an offspring of any of these
Biologically-related direct ancestor (parent, grandparent, and so on), stepparent, aunt, uncle, son- or daughter-in-law, father- or mother-in-law, or brother- or sister-in-law

Related or not, the person you’re claiming as a qualified relative must also fit these criteria:

They haven’t already been claimed for the Child Tax Credit or Credit for Other Dependents, either by you or by anyone else.
They have an SSN, ITIN, or ATIN issued on or before the due date of your return (including extensions).
They are a US citizen, US resident alien, or US national.
They aren’t filing a joint return with their spouse.
They either lived with you for the entire year or are related to you.
They have less than $4,700 gross income this year (nontaxable Social Security doesn't count).
You provided more than half of their financial support (more info).

The credit is $500 per qualifying dependent as long as the adjusted gross income (AGI) doesn’t exceed $200,000 ($400,000 if filing jointly). The credit goes down $50 for every $1,000 that the AGI exceeds the $200,000/$400,000 limit.