Claiming Dependents

Rules for claiming children and relatives as dependents

Family at healthy dinner
Klaus Vedfelt/ Iconica/ Getty Images

Being able to claim a dependent on a tax return is tied to a number of tax-related benefits. Taxpayers can deduct an additional personal exemption for each dependent that they claim. Taxpayers who claim a dependent may also be eligible for the child tax credit, the child and dependent care tax credit, and the earned income tax credit. Taxpayers who are not married and who support a dependent may be eligible for the head of household filing status.

With all these tax benefits tied to claiming a dependent, it is important to know whether or not your dependent can be claimed on your tax return.

To be eligible to claim a dependent, a taxpayer would need to meet the following four general criteria:

  • The taxpayer is not a dependent of another person. Persons who are dependents are treated as not being eligible to claim dependents.
  • The taxpayer cannot claim a dependent who is married and files a joint return. However, there's an exception. A married person can file a joint return and still be claimed as a dependent if that joint return claims only a refund of tax withholding or estimated tax payments and there would be no tax liability for either spouse had they filed separate returns.
  • The dependent in question is a citizen, national or resident alien of the United States, or a resident of Canada or Mexico.
  • The dependent in question meets the definition of being either a qualifying child or a qualifying relative.

    Dependents are categorized into two sub-types:

    These links will provide you with the necessary information to help you decide whether or not your dependent can be claimed under either of the sub-types.

    Every dependent who qualifies under either set of criteria can be claimed by one and only one taxpayer for that year.

    There are additional rules that help the IRS make sure that not more than one taxpayer claims the same dependent.

    First, the qualifying child criteria always take precedence over the qualifying relative criteria. So if someone can claim a dependent as a qualifying child, then no one else can claim the same dependent as a qualifying relative.

    Secondly, within the qualifying child criteria, the child must have been residing with the taxpayer for more than half the year. Within the qualifying relative criteria, the taxpayer must provide more than half the cost of the relative's support and care.

    The IRS audits tax returns where two or more taxpayers attempt to claim the same dependent, and only one taxpayer will win. The taxpayer who loses might also lose the related tax breaks such as the child tax credit, the earned income credit, or the Head of Household filing status. What that means, is that the losing taxpayer will have to pay additional taxes, plus penalties and interest. That makes dependent audits one of the most expensive audits that a taxpayer can endure.

    To protect yourself, you should make sure that you are eligible to claim each dependent shown on your return. Parents who do not live with each other, whether or not married, should also review the rules for sharing the tax benefits of a dependent. If you claim a dependent, you should gather any documents that would support your claim, and keep these documents for future reference. It would also be advisable to get a written agreement with the other parent detailing who gets to claim the dependents and for which years.

    Next pages:

    These criteria define what qualifies a child as a dependent.

    To be claimed as a qualifying child, the person must meet four criteria:

    Relationship — the person must be your child, step child, adopted child, foster child, brother or sister, or a descendant of one of these (for example, a grandchild or nephew).

    Residence — for more than half the year, the person must live in your home.

    Age — the person must be either

    • under age 19 at the end of the year, or
    • under age 24 and a full-time student for at least five months out of the year, or
    • any age and totally and permanently disabled.

    Support — the person did not provide more than half of his or her own support during the year.

    Some Tips about Claiming Qualifying Children

    The qualifying child must live with you for more than half the year. More than half a year means, at minimum, six months and one day. If you share custody, you may want to keep a log of where the child spends the night in your calendar.

    The qualifying child must not provide more than half of his or her own support. This is different from the tax laws that applied prior to 2005. Under the previous tax laws, the taxpayer had to provide over half the support for the child. This change makes it easier for families relying on public assistance, charity, and gifts from family members to claim a dependent.

    If a person does not meet the criteria to be a qualifying child, he or she might meet the criteria to be a qualifying relative. However, the qualifying child criteria trump the qualifying relative criteria under the tie-breaker tests. So, the taxpayer will want to make sure no other taxpayer could claim the dependent under the qualifying child criteria.

    This should be checked before claiming a qualifying relative on a tax return to minimize hassles when the IRS processes the tax return.

    Tie-Breaker Tests for Claiming a Qualifying Child

    If two or more taxpayers claim a dependent as a qualifying child in the same year, the IRS will use the following tie-breaker tests to determine which taxpayer is eligible to claim the dependent. The tie-breaker tests are listed in order of priority.

    The taxpayer most eligible to claim the child as a dependent under the qualifying child criteria is:

    1. the parent,
    2. the parent with whom the child lived for the longest time during the year,
    3. if the time was equal, the parent with the highest adjusted gross income,
    4. if no taxpayer is the child's parent, the taxpayer with the highest adjusted gross income.

    Some Additional Tips for Tie-Breaker Situations

    A child can be the dependent of at most one taxpayer. If you qualify to claim the child, then be ready to submit documentation to the IRS to support your claim.

    Chances are the child will spend at least one day more with one parent than the other parent, since there are usually 365 days in a year.

    Consider keeping a log of where the child spends the night.

    If the child spends exactly equal time with both parents, the parent with the higher income will be able to claim the dependent. Both parties can prevent an IRS audit by reviewing these tie-breaker rules in advance, and agreeing on who gets to claim the dependent.

    The non-qualifying parent can claim the dependent only if the qualifying parent releases his or her claim to the dependency exemption. You accomplish this by using IRS Form 8332, Release of Claim to Exemption for Child of Divorced or Separated Parents (PDF document). You can indicate on this form for which year or years you agree to release the exemption. You can also revoke the release if you later change your mind.

    Taxpayers may claim a qualifying relative as a dependent if that person meets the following criteria.

    Six Criteria for Qualifying Relatives

    1. The dependent cannot be a qualifying child of another taxpayer.
    2. The dependent earns less than the personal exemption amount during the year. For 2013, this means the dependent earns less than $3,900.
    3. The taxpayer provides more than half of the dependent's total support during the year.
    1. The taxpayer is related to the dependent in certain ways.
    2. If the dependent is married, the dependent cannot file a joint return with his or her spouse.
    3. The dependent must be a citizen or resident alien of the United States, Canada, or Mexico.

    TIPS

    • These rules apply to any dependent who is not a qualifying child.
    • They might apply to people such as cousins, parents, grandparents, and other people supported by the taxpayer.

    Qualifying Child Test

    Generally, taxpayers will not be able to claim a dependent if that dependent qualifies to be the qualifying child of another taxpayer. So you will want to check the qualifying child rules to make sure no one else can claim the dependent.

    The IRS has clarified this particular criteria. A dependent will not be considered a qualifying child of another taxpayer if that dependent's "parent or (or other person with respect to whom the individual is defined as a qualifying child) is not required ...

    to file an income tax return and (i) does not file an income tax return, or (ii) files an income tax return solely to obtain a refund of withheld income taxes." Source: Notice 2008-5 (pdf). While this may make it easier for taxpayers to claim a qualifying relative, it will also be important to be diligent in making sure that no one else can claim the dependent under the qualifying child criteria.

    Gross Income Test

    The gross income test is tied to the personal exemption amount. For 2013, the personal exemption amount is $3,900.

    A taxpayer cannot claim a dependent as a qualifying relative if that person's gross income is $3,900 or more (for 2013). "Gross income is all income in the form of money, property, and services that is not exempt from tax" (from Publication 501).

    Total Support Test

    The taxpayer must provide over half of a person's total support during the year. "Total support includes amounts spent to provide food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities" (from Publication 501).

    There is an exception to the Total Support Test. If multiple people support a single person, they may file a Multiple Support Agreement with the IRS to allow one person to claim the supported person as a dependent. For example, let's say three sons all equally support their mother. Since no one provides over half the mother's support, they could file a Multiple Support Agreement, IRS Form 2120 (PDF document) to allow one of the sons to claim the mother as a dependent.

    Relationship Test

    The relationship test is critical to being able to claim a qualifying relative. Some types of relationships have no residency requirements. For example, taxpayers can claim parents as dependents under the qualifying relative criteria as long as they meet the other criteria, and the parents don't have to reside in the same household as the taxpayers. Other types of relatives may have to live with the taxpayer for an entire year before to be eligible as a dependent under the qualifying relative criteria. Find a full list of Relationship and their Residence Requirements on the next page.

    Relationship Test for Qualifying Relatives

    To meet the relationship test, the dependent must either
    • be related to the taxpayer is one of the following ways, or
    • live with the taxpayer for an entire year, and the relationship must not violate local laws.

    Qualifying Relationships with no residency requirement

    The dependent will meet the relationship test for being claimed as a qualifying relative if the dependent is related to the taxpayer in one of the following ways:
    • son or daughter, grandson or granddaughter, great grandson or great granddaughter, stepson or stepdaughter, or adopted child,
    • brother or sister,
    • half-brother or half-sister,
    • step-brother or step-sister,
    • mother or father, grandparent, great-grandparent,
    • stepmother or stepfather,
    • nephew or niece,
    • aunt or uncle,
    • son-in-law, daughter-in-law, brother-in-law, sister-in-law, father-in-law, or mother-in-law, or
    • foster child who was placed in your custody by court order or by an authorized government agency.

    TIPS

    • Qualifying relatives who are related in one of these ways need not live with the taxpayer. As long as you meet the other four tests (gross income, support, citizenship, joint return), you can claim these qualifying relatives as a dependent.
    • Relationships established by marriage do not end with death or divorce. So if you support your mother-in-law, you can claim her as a dependent even if you and your spouse are divorced.
    • You can claim a foster child starting with the year that the foster child was placed in your custody.

    Qualifying Relationships with a mandatory residency requirement

    The dependent will meet the test to be claimed as a qualifying relative if:
    • The person is a member of your household, and
    • The person lives with you for an entire year, and
    • The relationship between you and the dependent does not violate local law.

    For example, you may be able to claim cousins, friends, boyfriend or girlfriend, or domestic partner as a dependent under the qualifying relative tests. These qualifying relatives must live with you for an entire year, and must meet all the other criteria for qualifying relatives (gross income, support, citizenship, joint return).

    The relationship, however, must not violate local law. For example, if your state prohibits co-habitation with a married person, then you cannot claim that person as your dependent even if you meet the other criteria for claiming a dependent.

    TIPS

    • Domestic partners may be claimed as a dependent under the qualifying relative tests.
    • Cousins may be claimed as a dependent under the qualifying relative tests.

    Continue Reading...