Lower Your Taxes: Claim All Eligible Dependents

Corey —  February 25, 2010 — Leave a comment

Uncle Sam says,        Making sure you claim all of your eligible dependents is an easy way to lower your taxes. Each dependent you claim will increase the total amount of exemptions you can apply to your tax return (a benefit of $3,650 per person for the 2009 tax year). Additionally, the number or type of dependents you can claim will affect your eligibility for certain tax credits. It’s also important to make sure you’re not claiming ineligible people as your dependents so you don’t get in trouble with the IRS. Here’s what you need to know:

Who Are Dependents?

       Dependents are either a qualifying child or qualifying relative who depend on you, the taxpayer, for at least 50% of their support (among other qualifications). The key phrase is “qualifying”, which means that they qualify according to the IRS definition – not yours. Just because someone lives with you doesn’t mean they’re automatically your dependent. There are specific requirements they must meet before you can claim them as a dependent on your tax return.

       While the requirements for a qualifying child and qualifying relative are similar, there are some tests that are specific to each type of dependent. We’ll look at the tests for a qualifying child first, and then we’ll look at the tests for a qualifying relative. This can get a bit complicated, so I’ll try to keep it simple and link to IRS resources for the exceptions.

What Are the Tests for a Qualifying Child?

       Use this series of questions to determine if a person can be considered a qualifying child for your tax return.

  1. Was the person younger than you or permanently and totally disabled?
     
    If YES, go to question #2. If NO, go down to the tests for a qualifying relative.
  2.  

  3. Was the person your son, daughter, stepchild, adopted child, eligible foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of those?
     
    If YES, go to question #3. If NO, go down to the tests for a qualifying relative.
  4.  

  5. Was the person under age 19 at the end of the year? OR Was the person under age 24 at the end of the year and a full-time student for some part of each of five months during the year? OR Was the person permanently and totally disabled (regardless of age)?
     
    If YES, go to question #4. If NO, go down to the tests for a qualifying relative.
  6.  

  7. Did the person provide over half of their own support for the year? Click here to read through the IRS definition of support.
     
    If NO, go to question #5. If YES, you can’t claim this person as your dependent.
  8.  

  9. Did the person live with you as a member of your household for more than half of the year? Note: There are special exceptions for kidnapped children, children that were born or died during the year, certain temporary absences, and children of divorced, separated, or never married parents. Click here to read about the exceptions.
     
    If YES, go to question #6. If NO, you can’t claim this person as your dependent.
  10.  

  11. Was the person a U.S. citizen, U.S. national, or a resident of the U.S., Canada, or Mexico?
     
    If YES, go to question #7. If NO, you can’t claim this person as your dependent. Answer YES if you are a U.S. citizen or national and your adopted child lived with you as a member of your household for the year.
  12.  

  13. Was the person considered legally married as of the end of the year (December 31)?
     
    If YES, go to question #8. If NO, go to question #9.
  14.  

  15. Is the person filing a joint tax return for this year?
     
    If NO, go to question #9. If YES, you can’t claim this person as a dependent. You can answer NO if the person is filing a joint return to claim a refund and no tax liability would have existed for either spouse if they had filed separate returns.
  16.  

  17. Is the person a qualifying child of any other person?
     
    If NO, go to question #10. If YES, you can’t claim this person as a dependent unless you are the person entitled to claim the person as a qualifying child (read the IRS guidelines for the special test for a qualifying child of more than one person – you’ll have to scroll down to it).
  18.  

  19. Can you or your spouse (if filing jointly) be claimed as a dependent on someone else’s tax return this year? Note: This applies even if the person chooses not to claim you. You must answer YES if they have the option to claim you (or your spouse) as a dependent.
     
    If NO, you can claim this person as your dependent. If YES, you can’t claim anyone as your dependent – no exceptions.



Well that was fun! Now let’s look at the tests for a qualifying relative.

What Are the Tests for a Qualifying Relative?

       Use this series of questions to determine if a person can be considered a qualifying relative for your tax return.

  1. Is the person your qualifying child or the qualifying child of anyone else?
     
    If NO, go to question #2. If YES, this person is not your qualifying relative (you should go back up to the tests for a qualifying child).
  2.  

  3. Is the person your son, daughter, adopted child, foster child, or a descendant of any of those? OR Is the person your brother, sister, or a son or daughter of either of them? OR Is the person your father, mother, or an ancestor or sibling of either of them? OR Is the person your half brother, half sister, stepbrother, stepsister, stepfather, stepmother, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law?
     
    If NO, go to question #3. If YES, go to question #4. Note: None of the relatives listed in this question have to live with you in order to qualify as your dependent.
  4.  

  5. Was the person any other person (besides your spouse) who lived with you all year as a member of your household? Note: There are special exceptions for kidnapped children, children that were born or died during the year, certain temporary absences, and children of divorced, separated, or never married parents. Click here to read about the exceptions.
     
    If NO, you can’t claim this person as your dependent. If YES, go to question #4. Note: A person doesn’t meet this test if at any time during the year your relationship with that person violates local law.
  6.  

  7. Was the person a U.S. citizen, U.S. national, or a resident of the U.S., Canada, or Mexico?
     
    If YES, go to question #5. If NO, you can’t claim this person as your dependent. Answer YES if you are a U.S. citizen or national and your adopted child lived with you as a member of your household for the year.
  8.  

  9. Did the person have gross taxable income of less than $3,650 in 2009?
     
    If YES, go to question #6. If NO, you can’t claim this person as your dependent.
  10.  

  11. Did you provide more than half of the person’s total support for the year? Click here to read through the IRS definition of support.
     
    If YES, go to question #11. If NO, go to question #7.
  12.  

  13. Did another person provide more than half of the person’s total support for the year?
     
    If NO, go to question #8. If YES, you can’t claim this person as your dependent.
  14.  

  15. Did two or more people together provide more than half of the person’s total support?
     
    If YES, go to question #9. If NO, you can’t claim this person as your dependent.
  16.  

  17. Did you provide more than 10% of the person’s total support for the year?
     
    If YES, go to question #10. If NO, you can’t claim this person as your dependent.
  18.  

  19. Did the other person(s) providing more than 10% of the person’s total support for the year provide you with a signed statement (Form 2120 – Multiple Support Declaration) agreeing not to claim the exemption?
     
    If YES, go to question #11. If NO, you can’t claim this person as your dependent.
  20.  

  21. Was the person considered legally married as of the end of the year (December 31)?
     
    If YES, go to question #12. If NO, go to question #13.
  22.  

  23. Is the person filing a joint tax return for this year?
     
    If NO, go to question #13. If YES, you can’t claim this person as a dependent. You can answer NO if the person is filing a joint return to claim a refund and no tax liability would have existed for either spouse if they had filed separate returns.
  24.  

  25. Can you or your spouse (if filing jointly) be claimed as a dependent on someone else’s tax return this year? Note: This applies even if the person chooses not to claim you. You must answer YES if they have the option to claim you (or your spouse) as a dependent.
     
    If NO, you can claim this person as your dependent. If YES, you can’t claim anyone as your dependent – no exceptions.



       That covers all the tests for a qualifying child or qualifying relative. I can’t say that was particularly fun for me, and I’m sure it wasn’t for you. But like I said before, it’s important to make sure you’re claiming all the people you can and only those people you’re allowed to claim. If you have any questions, leave them in the comments and I’ll do my best to help you!

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Corey

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Corey is currently pursuing a Master of Arts degree in religion. While he enjoys learning and writing about Christianity, another one of his new passions is writing about personal finances in order to help others make wise decisions with their money.

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