Questions about Claiming Dependents for the 2018 Tax Year
There are two kinds of dependents and rules are a little different for each
It's something most people wonder about as a new tax filing due date approaches, or even when it's in your rear-view mirror but you're trying to plan your tax situation for the year ahead. Who can you claim as a dependent? Can you claim your child if you're divorced? What about your elderly mother?
The rules are intricate, and they changed somewhat on Dec. 22, 2017 when the Tax Cuts and Jobs Act (TCJA) was signed into law.
Can Taxpayers Still Claim Dependents?
The TCJA did not eliminate dependents from the tax code, although it might appear that way on the surface. What it did was eliminate personal exemptions beginning in tax year 2018 through at least tax year 2025. But a few credits require that you have at least one dependent to qualify, and several other provisions of the tax code involve your dependents as well. So having dependents can still help you at tax time, but maybe not quite as much.
Some tax credits tweak these rules for dependents a little bit, so make sure you understand the exact dependent rules for each credit you hope to claim.
The Basic Rules for Claiming Dependents
Of course, the IRS imposes some qualifying rules for who you can claim. There are two buzz words here—qualifying child and qualifying relative—and the rules for each are different.
- The support rule: You must provide more than half your qualifying relative's support needs for the tax year, and if your qualifying child works, she can't provide more than half her own support.
- The relationship rule: A qualifying child must be related to you, although not necessarily literally and by blood. Adopted children, stepchildren, foster children, siblings, stepsiblings, half siblings, or the children of any of these individuals all qualify.
- The residence rule: Your qualifying child must live in your home for more than half the year.
- The age rule: Your qualifying child must be younger than you and younger than age 19 on the last day of the tax year unless he's a full-time student. In this case, the age limit extends to 24. There's no age limit if he's permanently and totally disabled.
- The income rule: Qualifying relatives cannot earn $4,150 or more as of the 2018 tax year. There aren't any income limits for qualifying children, but again, they can't use their own money to pay for more than half their own support.
Some Other Rules
If someone can claim a child under the definition of a qualifying child, no other taxpayer can claim that same child as a qualifying relative.
For qualifying relatives, the relationship between yourself and your dependent can be important. Some relationships have mandatory residency requirements. In some cases, your dependent must actually live with you through the entire year. Other relatives, such as your parents, don't have to live with you, but you must still pay for more than half of their living expenses elsewhere.
If you need help determining whether you can or should claim someone as a dependent, have every person who could possibly claim him sit down and discuss the issue rationally before anyone files their tax returns. More than one taxpayer claiming the same individual will inevitably invite a negative response from the IRS.
Can Any Relative Claim a Child as a Dependent?
Maybe you and your ex have a child together. You pay child support and you provide your child with health insurance. Your ex has custody but she doesn't work so she lets her mother claim the child as a dependent. Is this right? Is it allowed?
Remember, the child must live with you for more than half the year. If your daughter does not live with you for more than six months, you would not be able to claim her as a dependent even if you pay child support and help with other financial needs. Therefore, anyone else claiming her is irrelevant to your personal tax situation.
As long as the child meets the tests for a qualifying child, your ex's mother might well be able to claim her as a dependent. Grandchildren are covered in the rule that says the child must be related in some fashion to the taxpayer. But you have to look at the other three criteria as well. Your child must have lived with her grandmother for more than half the year, and she must be under age 19 or age 24 if she's a full-time student.
So did your child live with your ex or with your ex's mom? If she lived with them both equally, only your ex would be able to claim your child as a dependent using the IRS tiebreaker tests because being the parent trumps other relationships.
The tax code doesn't care if your child was born on Jan. 1 or Dec. 31. He can be your dependent as long as he was born at any time during the tax year.
Child Dependents and Head of Household Filing Status
Now let's say that you have a child who meets the rules as your qualifying child. Does this qualify you for head of household filing status, which can be advantageous?
Not by itself. You can claim her as a dependent for purposes of qualifying for head of household status as long as your child meets the criteria for a qualifying child, but you would only be eligible to file as head of household if you also paid more than half the costs for your home during the tax year. You must also be unmarried.
What If Parents Have 50/50 Joint Custody?
As a practical matter, an exact 50/50 custody split is pretty much impossible except in leap years. There are 365 days in a year, so even if your child lived with each of you for exactly six months or 182 days, there's still that 365th day dangling out there, waiting to act as a tiebreaker. But if your child spent a portion of the year living with a third party, that could change the equation.
If your child actually did live with each parent for exactly half the year, the IRS has a tiebreaker test for this situation. If the child spends an equal amount of time with both parents, the parent with the highest adjusted gross income gets to claim her as a dependent.
Can Your Parent Be Your Dependent?
Parents fall into the category of "qualifying relatives." You can claim your parent as a dependent if he earns less than $4,150 in taxable income in the 2018 tax year. But Social Security doesn't count as taxable income in this circumstance, even though some portion of that income might end up being taxable to your parent when he prepares his own tax return.
If you and your parent meet all these rules, you can claim him as a dependent. He doesn't actually have to live with you, either, because there is no residency requirement for parents. But you must provide more than half his total financial support.
The IRS offers an interactive tool on its website to help you determine for sure if your child or relative qualifies as your dependent. It's a quiz that takes just about 15 minutes.
NOTE: Tax laws can change frequently and the above information may not reflect the most recent changes. Please consult with a tax professional for the most up-to-date advice.