One of the most reliable tax breaks is claiming a dependent. It should be easy to do, and for most people with children or an elderly parent, it is. But there are some living situations which seem to be in a gray area.
Who can qualify as a dependent?
There are two main types of dependents, qualifying relatives and qualifying children. Both types must meet the following requirements:
- They must be a U.S. citizen, resident, or national or a resident of Mexico or Canada.
- You must be the only taxpayer claiming them.
- They must be filing single or married filing separately.
What is a qualifying child?
A qualifying child is a person who meets the following requirements as well as those listed above.
- They must be related to you, by blood, marriage, or adoption. Some foster children are also included.
- They must either be under 19 or a full-time student under 24.
- You must financially support them.
- They must live with you for at least half of the year.
What if my child is in college?
If the child is a full-time student, you may claim them until they are 24. Also, even if they attend school in another state, they are still treated as if they live with you for half of the year. This is on a temporary basis. It is also treated as if they would be living with you if they were not in school. Learn more about claiming a college student here.
What if two people want to claim the child?
Children can only be claimed by one taxpayer. If both parents are looking to claim the child, whether they are divorced, separated, or filing separately, the parent who lives with the child for the majority of the year gets priority. If the child split their time equally, the child can be claimed by the parent with the highest adjusted gross income (AGI).
If a parent and another relative like a grandparent are trying to claim the child, the parent always gets the right. If the parent rejects this right, a grandparent or other relative can claim the child as long as their AGI is higher than the parent’s income.
If neither person is a direct parent, the right to claim the child goes to whoever has the highest AGI.
What is a qualifying relative?
To be a qualifying relative, they must meet the following requirements:
- They can’t make more than $4,150 per year.
- They can’t be a qualifying child.
- You must provide more than half of their financial support for the year.
- They must either be related to you by blood, marriage, or adoption OR they must have lived with you for the entire year.
The last point allows you to claim boyfriends or girlfriends, your children’s friends that you might have taken in, and many other people who might live with you.
This article is up to date and accounts for tax law changes for tax year 2018 (tax returns filed in 2019). Learn more about tax reform enacted under the Tax Cuts and Jobs Act here.