People have been claiming others as dependents on their taxes in order to reduce their tax liability and take advantage of many tax credits. At one time, you could count someone as a dependent as long as they were someone you cared for. However, the laws have changed and the people you count as a tax dependent has changed. The following are the updated regulations for claiming dependents.
Who Can Be Claimed As a Dependent?
In order to claim someone as a dependent, they must first meet the criteria of being a qualifying child or relative. However, there are many rules to keep in mind. First of all, only one taxpayer can claim someone as a dependent. For example, if a divorced couple has a child, only one person can claim that child. If you aren’t sure how to handle this situation, ask a professional how to file a tax extension and then take the time to talk to a professional or to finalize the details of your child custody arrangements.
What Are the Basic Qualifications?
In order to claim a qualifying child on your taxes the child must meet the relationship qualification (child, step-child, adopted child, etc), be the proper age (under the age of 19 at the end of the year, 24 if living at home, or any age if permanently disabled), you provided over 50% of the monetary support for the dependent, and they live with you for more than half the year. In order to claim a relative, they must meet many of the same qualifications as children, except they cannot be a qualifying child and they must be related to you in certain ways and have proper citizenship. They also must not be a qualified dependent of someone else. Lastly, they must have made less than the personal exemption amount for that year. Qualified relation status includes all immediate family members and does not end just because the person linking your relationship passed on. For example, if you’re a step-father and your wife dies, you can still continue to claim your step-daughter as a dependent.
What About Foster Children?
The biggest update with foster children is that foster parents no longer have to wait an entire year before claiming foster children. Foster parents can begin claiming foster children the year that they start living with you. If you are unsure about how this works, talk to your state social service agency or the group you are working with to care for your foster child. They’ll know how to best direct your efforts.
Not much has really changed with the rules for claiming a dependent, but you must always follow the rules carefully to make sure your dependent meets the qualifications or risk being audited. This means you need to check the laws every year before completing your taxes and ask for tax help if you are overwhelmed. Just because you could count someone as a dependent one year doesn’t mean you can the next and this has gotten many taxpayers in a heap of trouble.
