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Tax Talk 2016 FAQ
Tax FAQ

Who can I claim as a dependent on my tax return?

Who can I claim as a dependent on my tax return?

Taxpayers can apply the same definition of a dependent when determining their eligibility for the dependency exemption, head of household filing status, earned income credit, child tax credit, and child and dependent care tax credit.

To claim someone as a dependent, he/she must meet the following five criteria:

1. The Relationship Test

The dependent must be your child or a qualified relative. Qualified relatives include adopted children, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendent of one of these relatives.

2. The Residency Test

To qualify as your dependent, the child must live with you for more than half of the year. Time spent at school or vacation still counts as time lived at home, as does time away from home for medical care or military service. In addition, any time spent at a juvenile detention facility also counts as time lived at home.

3. The Age Test  

This varies by tax benefit.

Dependency exemption, earned income credit and head of household filing status

To qualify for these tax benefits, the dependent child must be under age 19 by Dec. 31, 2016; under age 24 by Dec. 31, 2016, if the dependent is a student; or any age if he/she is permanently and totally disabled. There is no age requirement for the qualifying relative; however they must have a gross income of less than $4,050. 

Child tax credit.

To qualify for the child tax credit, the dependent must be under 17.
Credit for child and dependent care expenses.
Children under 13 and permanent and totally disabled children of any age qualify for this credit.

4. The Support Test

To qualify as a dependent, a child cannot have provided more than 50 percent of his or her own support during the year. Support includes the cost of shelter, food, clothing, education, health care, transportation, and similar necessities.
Exception
If determining eligibility for the earned income credit, the support test does not apply.

5. Joint Return Test

If married, the child must have not filed a joint return.

Exception

IF the only reason for filing a joint return is to claim a refund, the child meets the test.

Tie-Breaker Rules
It’s possible that a child is the qualifying child of more than one person.  In that case, the tie-breaker rules determine who can claim the child as their qualifying child:

  • If only one of the persons is the child's parent, the child is treated as the qualifying child of the parent.
  • If the parents do not file a joint return together but both parents claim the child as a qualifying child, the IRS will treat the child as the qualifying child of the parent with whom the child lived for the longer period of time during the year. If the child lived with each parent for the same amount of time, the IRS will treat the child as the qualifying child of the parent who had the higher adjusted gross income (AGI) for the year.
  • If no parent can claim the child as a qualifying child, the child is treated as the qualifying child of the person who had the highest AGI for the year.
  • If a parent can claim the child as a qualifying child but no parent does so claim the child, the child is treated as the qualifying child of the person who had the highest AGI for the year, but only if that person's AGI is higher than the highest AGI of any of the child's parents who can claim the child. If the child's parents file a joint return with each other, this rule can be applied by dividing the parents' combined AGI equally between the parents (from www.IRS.gov)

I am divorced. Can I claim my child as a dependent?
In the case of divorced parents, the general rule is that the custodial parent claims the dependency exemption even if the non-custodial parent paid most of the child support. However, the custodial parent may agree to waive the exemption by signing Form 8332, Release of Claim to Exemption for Child of Divorced or Separated Parents. The non-custodial parent attaches this form to his or her return and claims the exemption.

My sister and I help take care of my 80-year-old mother. Who can count her as a dependent?
If two or more persons together provide more than 50 percent of an individual’s support, but no one member of the group provides more than half, the individuals may enter into a multiple support agreement. Under this agreement, the dependency exemption may be claimed by any person providing more than 10 percent of the individual’s support. If you are that person, you must have each person who contributes over 10 percent sign IRS Form 2120, Multiple Support Declaration, which you submit with your tax return. For example, if you and your sister determine that you can claim your mother as a dependent this year, your sister would sign Form 2120 and waive her right to claim your mother as a dependent. 

How much is a dependency exemption worth?
In general, for 2016, each taxpayer may claim a personal exemption of $4,050. If you are married and file a joint return, you and your spouse each claim a personal exemption. You can claim an exemption for your spouse, even if he or she died during the tax year, provided that you did not remarry. In addition, a taxpayer is entitled to an additional $4,050 dependency exemption for each qualified dependent. A child qualifies for an exemption, even if he or she is born on the last day of the year. 

My husband and I have a combined income of $320,000. Do we still qualify for dependency-related deductions?
Because of the American Taxpayer Relief Act of 2012, there are new exemption phaseout limits.

Taxpayers with AGI levels of $259,400 for singles, $311,300 for married filing jointly, will see the loss of some or all of their previously allowed personal and dependent exemption deductions.

To claim an exemption for a dependent, you must use Form 1040 or Form 1040A and include a Social Security number for each dependent.



 American Institute of Certified Public Accountants Texas State Board of Public Accountancy