A tax dependent is a child or relative whose characteristics and relationship to you entitle you to claim certain tax deductions and credits, such as head of household filing status, the Child Tax Credit, the Credit for Other Dependents, the Earned Income Tax Credit or the Child and Dependent Care Credit.
Determining whether someone is a tax dependent can be difficult, though. Here’s a rundown, but keep in mind that this is a complex area of the tax code and there are exceptions to every rule. For all the details, check out IRS Publication 501.
Who qualifies as a tax dependent
For tax purposes, there are two kinds of dependents:
- A qualifying child.
- A qualifying relative.
To claim a child as a dependent on your tax return, the child must meet all of the following conditions.
The child has to be part of your family
This is the relationship test. The child must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister or a descendant of any of those people.
The child has to be under a certain age
This is the age test. One of these three things has to be true to pass this test:
- The child was 18 or younger at the end of the year and younger than you or your spouse (if you’re married and filing jointly).
- The child was 23 or younger at the end of the year, was a student and was younger than you or your spouse (if you’re married and filing jointly). “Student” in this case means the kid was a full-time student for at least five calendar months of the year.
- The child is over these age limits but is permanently and totally disabled, as determined by a doctor.
The child has to live with you
This is the residency test. The child must have lived with you for more than half the tax year. There are certain exceptions for temporary absences (such as if the child was away at college, in the hospital or in juvenile detention), for children who were born or died during the tax year, for kids of divorced or separated parents and for kidnapped kids.
In cases of divorce or separation, the custodial parent typically gets to claim the child as a dependent. However, sometimes the noncustodial parent can claim a child as a dependent if the custodial parent signs a written declaration that he or she won’t claim the child as a dependent.
You have to provide MORE THAN half OF the kid’s financial support
If your child gets a job and provides at least half of her own financial support, you can’t claim the child as a tax dependent. However, support generally includes household expenses such as rent, groceries, utilities, clothing, unreimbursed medical expenses, travel costs and recreation expenses.
The child can’t file a joint tax return with someone
This is the joint return test. There’s an exception here if the child and the child’s spouse file a joint return only to claim a refund of income tax withheld or estimated tax paid.
The child has to have certain residency or citizenship status
This is the citizen or resident test. The child has to be a U.S. citizen, U.S. resident alien, U.S. national or a resident of Canada or Mexico.
A qualifying relative can be any age. But to claim a relative as a tax dependent on your tax return, the person must meet all of the following conditions.
The person can’t be anyone else’s qualifying child
You can’t claim someone else’s qualifying child as your qualifying relative. So if your toddler lives with your parents, for example, and he meets all the tests to be their qualifying child, you can’t also claim him as your qualifying relative.
The person has to be related to you or live with you
Only one of these two things has to be true:
- The person has one of these relationships to you. He or she is your child, stepchild, legally adopted child, foster child, or a descendant of any of those people (for example, your grandchild) or is your sibling, half sibling, stepsibling, niece or nephew (including the kids of your half siblings), or is your parent or grandparent, stepparent, aunt or uncle, or in-law (but not your foster parent).
- The person lived with you all year. There are exceptions for temporary absences (such as if the child was away at college), for children who were born or died during the tax year, for kids of divorced or separated parents and for kidnapped kids.
Note that only one of the two things has to be true in order to get over the hurdle. That means that a person related to you doesn’t necessarily have to live with you in order for you to claim them as a dependent. This can be especially important for people supporting elderly parents who live somewhere else.
The person’s gross income is below the limit
The person’s gross income for the year can’t be more than $4,150 (in 2020, the limit is $4,300). People who are disabled or have income from a sheltered workshop get an exception. Gross income includes money from rental properties, business income and taxable unemployment and Social Security benefits.
You have to provide MORE THAN half OF the person’s total financial support for the year
Support generally includes household expenses such as rent, groceries, utilities, clothing, unreimbursed medical expenses, travel costs and recreation expenses. If multiple people provide support for a person and because of that no one person is providing more than 50% of the support, the support providers can sign a Multiple Support Declaration designating who gets to claim the supported person as their dependent.
Who is not a tax dependent
These people generally won’t count as your tax dependents:
- Anyone at all, if someone else can claim you as a dependent (in other words, you usually can’t be someone’s dependent and then claim dependents yourself).
- Generally, a married person who files a joint tax return (there are some important but complicated exceptions to this; see IRS Publication 501 for the details).
- Anybody who is not a U.S. citizen, U.S. resident alien, U.S. national or a resident of Canada or Mexico (there are exceptions here for people adopting children).
- People who work for you.
- Foreign exchange students.
Tax breaks for claiming a dependent
Claiming a dependent can get you some big tax breaks. Decent tax software should ask you questions that will help determine whether you qualify.
- Head of household filing status. This filing status gets you bigger tax deductions and more favorable tax brackets than if you filed as single. (How it works.)
- Child Tax Credit and Credit for Other Dependents. This could get you up to $2,000 per child and $500 for a non-child dependent. (How it works.)
- Child and Dependent Care Tax Credit. Generally, it’s 20% to 35% of up to $3,000 of day care and similar costs for a child under 13, an incapacitated spouse or parent, or another dependent so you can work — and up to $6,000 of expenses for two or more dependents. (How it works.)
- Earned Income Credit. This credit can get you between $529 and $6,557 in 2019 depending on how many kids you have, your marital status and how much you make. In 2020, the credit ranges from $538 to $6,660. It’s something to explore if your adjusted gross income is less than about $57,000. (How it works.)
- Adoption credit. For the 2019 tax year, this item covers up to $14,080 in adoption costs per child; in 2020 it covers up to $14,300. (How it works.)