CARL WATTS & ASSOCIATES

August 14, 2016

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Claiming Dependents
2. Member of Household or Relationship Test. To meet this test, a person must either:

Live with you all year as a member of your household, or

Be related to you in one of the following ways: your child, stepchild, foster child, or a descendant of any of them; your brother, sister, half brother, half sister, stepbrother, or stepsister; your father, mother, grandparent, or other direct ancestor, but not foster parent; your stepfather or stepmother; a son or daughter of your brother or sister; a son or daughter of your half brother or half sister; a brother or sister of your father or mother; your son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in- law, or sister-in-law. A person related to you in any of these ways doesn't have to live with you all year as a member of

3. Gross Income Test. To meet this test, a person's gross income for the year must be less than $4,050. (Gross income is all income in the form of money, property, and services that isn't exempt from tax.)

4.

Support Test. To meet this test, you generally must provide more than half of a person's total support during the calendar year. You figure whether you have provided more than half of a person's total support by comparing the amount you contributed to that person's support with the entire amount of support that person received from all sources. This includes support the person provided from his or her own funds.

If you file a joint return, the person can be related to either you or your spouse. Also, the person doesn't need to be related to the spouse who provides support.

If you can claim an exemption for your dependent, the dependent can’t claim his or her own personal exemption on his or her own tax return. This is true even if you don’t claim the dependent's exemption on your return. It is also true if the dependent's exemption on your return is reduced or eliminated under the phaseout rule described under Phaseout of Exemptions,

If you can be claimed as a dependent by another person, you can’t claim anyone else as a dependent. Even if you have a qualifying child or qualifying relative, you can’t claim that person as a dependent.

A person who died during the year, but lived with you as a member of your household until death, will meet this test. The same is true for a child who was born during the year and lived with you as a member of your household for the rest of the year. The test is also met if a child lived with you as a member of your household except for any required hospital stay following birth. If your dependent died during the year and you otherwise qualify to claim an exemption for the dependent, you can still claim the exemption.

If you are filing a joint return and your spouse can be claimed as a dependent by someone else, you and your spouse can’t claim any dependents on your joint return.

You generally cannot claim a married person as a dependent if he or she files a joint return.

You generally can’t claim a person as a dependent unless that person is a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico. However, there is an exception for certain adopted children.

Children usually are citizens or residents of the country of their parents. If you were a U.S. citizen when your child was born, the child may be a U.S. citizen and meet this test even if the other parent was a nonresident alien and the child was born in a foreign country.

With the multitude of rules and exceptions thereof, we feel it is our duty to advise you to look for support and council from a tax professional in all your dealings with the IRS.

If you read our previous newsletter “Exemptions on Your Tax Return”, as you usually do, you became quite familiarized with the exemptions you can claim on your tax return. When it came to dependency exemptions, you were promised a whole other newsletter on the subject.

As you know, you are allowed one exemption for each person you can claim as a dependent and, equally important, that the term “dependent” itself may refer to a qualifying child, or a qualifying relative.

Our obvious purpose here is to clarify who can qualify as a dependent on your tax return.

Determining who qualifies as a dependent on your tax return is important not just for claiming exemptions, it can also qualify you for some tax credits, such as the child and dependent care credit and the earned-income tax credit. In addition, it also helps you determine if you can write off dependent daycare expenses, medical expenses, various itemized deductions and most tax credits that involve children or family issues. Qualifying for these benefits can make the difference between owing money and receiving a refund.

There are five tests that can help you to determine if a child qualifies as your dependent.

1. The Relationship Test. To meet this test, a child must be:

Your son, daughter, stepchild, foster child, or a descendant (for example, your grandchild) of any of them, or

Your brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant (for example, your niece or nephew) of any of them.



2. The Age Test. According to this test, a child must be:

Under age 19 at the end of the year and younger than you (or your spouse, if filing jointly),

A student under age 24 at the end of the year and younger than you (or your spouse, if filing jointly), or

Permanently and totally disabled at any time during the year, regardless of age.



3.
The Residency Test. To meet this test, your child must have lived with you for more than half the year. There are exceptions for temporary absences, children who were born or died during the year, kidnapped children, and children of divorced or separated parents.




4.
The Support Test. To meet this test, the child cannot have provided more than half of his or her own support for the year. (This test is different from the support test to be a qualifying relative, which is mentioned later.)



5.
The Joint Return Test. To meet this test, the child cannot file a joint return for the year.


Sometimes, a child meets the relationship, age, residency, support, and joint return tests to be a qualifying child of more than one person. Although the child is a qualifying child of each of these persons, only one person can actually treat the child as a qualifying child to take all of the possible tax benefits (provided the person is eligible for each benefit).

There are tiebreaker rules to determine which person can treat the child as a qualifying child to claim six possible tax benefits: the exemption for the child, the child tax credit, head of household filing status, the credit for child and dependent care expenses, the exclusion from income for dependent care benefits, and the earned income credit.


There are four tests that must be met for a person to be your qualifying relative.


  1. Not a Qualifying Child Test. A child isn't your qualifying relative if the child is your qualifying child or the qualifying child of any other taxpayer.




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