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Claiming someone as your dependent could lead to big tax breaks. However, figuring out who qualifies as a dependent for tax purposes can sometimes be confusing.
For example, a stay-at-home spouse isn't a dependent. But your stepbrother's child might count as your dependent. Or, if you support someone who isn't related to you, the person may still be considered your qualifying relative.
Generally, you may be able to claim someone as a dependent if the person lived with you for the year and you provided the majority of their financial support. Of course, because we're dealing with the tax code, there are all sorts of fine-print exceptions.
How Do I Know if I Can Claim Someone as a Dependent?
To start, there are a few basic requirements that need to be met to claim someone else as a dependent:
- No one else can claim you, or your spouse if you're filing a joint return, as a dependent. Even if the person chooses not to claim you as a dependent, the fact that they could makes you ineligible.
- You generally can't claim anyone who is married and files a joint return. However, there are exceptions if the person only files a joint return to get back income taxes that were withheld from paychecks or estimated tax payments.
- The person you're claiming must be a U.S. citizen, resident alien (which can include undocumented residents), U.S. national, or resident of Canada or Mexico. There are also some exceptions for adopted children who lived with you in the U.S.
These general rules apply to everyone. Additionally, the person you're claiming must meet all the requirements to be your qualifying child or qualifying relative.
The Two Types of Qualifying Tax Dependents
Children and relatives can qualify as tax dependents—but their definitions are broader than you may suspect.
In addition to your birth child or an adopted child, your foster child, siblings, half-siblings and step-siblings (along with all the siblings' descendants) can be qualifying children. And your son-in-law, mother-in-law, parents, grandparents and in-laws could all be qualifying relatives.
A person doesn't even need to be a relative to count as a qualifying relative. A girlfriend, boyfriend or roommate could be your dependent as long as the person is a member of your household for the entire year and meets all the other requirements.
The IRS' Publication 17, chapter 3, has a complete list of which relationships can qualify someone as a child or relative for dependent purposes.
In addition to the relationship requirement, the qualifying child or qualifying relative has to pass a series of "tests."
There are four tests for qualifying children:
- The child must be 19 or younger at the end of the tax year and younger than you (and your spouse if you file a joint return). Qualifying children can be up to 24 years old if they're also full-time students for at least five months of the year, or they can be any age if they're permanently and totally disabled.
- The child has to live with you for at least half the year. There are exceptions for temporary absences, such as when you or the child are away from home for school, business, vacation or military service.
- The child can't provide more than half of his or her own support during the year (scholarships don't count as support).
- The child can't file a joint tax return unless the only reason for filing is to get back the taxes that were withheld from his or her pay or were part of estimated tax payments.
The rules for who can claim a qualifying child can get fairly complex when both parents can claim the child as a dependent but they aren't married, or they file their tax returns using the married filing separately status.
Some parents switch off, letting one person claim the child one year and the other parent claim the child the next. The IRS also has an official series of tiebreaker rules (see page 30 of Publication 17) to determine who can claim the child if you can't come to an amicable agreement.
There are three additional tests for your qualifying relatives:
- The person can't be anyone's qualifying child.
- The person's gross income must be below $4,150. Income could include money, property, goods or services they received, and it may include Social Security benefits. However, there are exceptions for people with disabilities who received income from certain tax-exempt schools.
- You have to provide more than half of the person's support for the year.
If working through all the tests sound like too much work, you could also try the IRS' interactive tool, which can help you determine if you can claim someone as a dependent.
Preventing Tax Time Identity Theft
Whether you're claiming a child or relative as a dependent, let the tax season also be a reminder about the importance of keeping your personal information secure. Unfortunately, identity theft and the tax season can go hand-in-hand, as thieves may try and claim your tax refund for themselves.
Some scammers may even go after children's personal information and attempt to take out a loan or open a credit card in the child's name. Experian offers a free service that lets you see if your child's Social Security number is part of an Experian credit file. If it is, that could be an indication of identity theft.
If you don't find anything, that's a good thing. But you can still take proactive preventive measures by freezing your child's credit file for free, which can help prevent someone from using your child's identity to open an account.