Questions about Claiming Dependents
Who Can You Claim as a Dependent?
It's a commonly asked question at the beginning of the year when people are starting to think about preparing their tax returns. 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 but they became a little easier on December 22, 2017—at least in one respect. The Tax Cuts and Jobs Act was signed into law on that date and it eliminated personal exemptions from the tax code beginning in 2018 through at least 2025. The new law doesn't eliminate dependents—a few credits require that you have at least one dependent and several other provisions of the tax code involve your dependents as well—but you can no longer take a personal exemption for each of the dependents you can claim.
So having dependents can still help you at tax time, but not as much. The rules explained here cover the 2017 and 2018 tax years. You can't take exemptions for any dependents you qualify to claim in 2018, but you can still do so on your 2017 tax return. And some tax credits tweak these rules a little bit, so make sure you understand the exact dependent rules for each if you're planning to claim one or more of them, such as the child tax credit.
- A lot of you have memorized the rule that you must provide more than half your dependent's total support for the year, but you can remove this idea from your memory. It no longer applies, at least not by itself and not for the purpose of qualifying child dependents. It still pertains to the child tax credit, however.
- There are two buzz words: qualifying child and qualifying relative. The rules for each are different.
- A qualifying child must be related to you. This includes adopted children, stepchildren, foster children, siblings, stepsiblings, half siblings, or the children of any of these individuals.
- Your child must live in your home for more than half the year.
- Your 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.
- If someone can claim a child under the definition of a qualifying child, no one else can claim that same child as a qualifying relative.
- For qualifying relatives, the relationship between yourself and the dependent can be important. Some relationships have mandatory residency requirements. Your dependent must actually live with you. Others do not.
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 result in unnecessary hassles.
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 tiebreaker tests because being the parent trumps other relationships.
Is the Dependent Exemption Reduced If Your Child Was Born During the Tax Year?
First, remember that there's no longer a dependent exemption for tax years 2018 through 2025. But if you're trying to figure out your 2017 tax return, here's the rule and it's the standard: You can claim your child as a dependent as long as he meets the criteria for a qualifying child.
The tax code doesn't care if he was born on January 1, 2017 or December 31, 2017. As long as he was born in 2017, you still get the full personal exemption for that tax year.
Child Dependents and Head of Household Filing Status
Now lets say that you were divorced in May, 2017. You have a child who meets the rules as your qualifying child, and this qualifies you for head of household filing status, which can be advantageous. Or does it?
As long as your child meets the criteria for a qualifying child, you can claim her as a dependent for purposes of qualifying for head of household status. As an unmarried person for the last half of the year with at least one dependent, you would be eligible to file as head of household if you paid more than half the costs for your home during the tax year.
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 you for exactly six months or 182 days and with your ex for six months and 182 days, there's still that 365th day dangling out there, waiting to be accounted for. Remember, the rule says that your child must live with you more than half the year, so technically only the parent who had the child on that 365th day would have had him for more than half the year.
If your child actually did live with you for exactly half the year in a leap year when there were 366 days, you might lose out. But not to fear—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 $4,050 in taxable income in 2017—he must earn less than the amount of that year's personal exemption. This figure is expected to be $4,100 in 2018 for qualifying purposes, even though you can no longer claim exemptions. You must provide more than half his total financial support.
Social Security does not 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.
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.