Supporting other people, whether children or qualifying relatives, is sometimes a necessity in life. It can also save you money when paying your taxes, though – sometimes thousands.
You may not know who qualifies and how to claim a dependent on your tax return, however. What is a dependent, according to the IRS?
A dependent is someone who relies on you for at least half of their support in a given year, including food, clothing, shelter, and other necessities. They could be your adopted or biological child or another qualifying family member who lives with you and who you care for, financially and otherwise.
You need to provide a significant amount of support for a dependent to qualify, and usually, adult children aren’t eligible to be claimed as dependents unless they meet certain requirements. This guide will walk you through eligibility requirements and six important steps for claiming a dependent on your tax return.
Determining Who Qualifies When Claiming a Dependent
Not every family member you support will qualify as a dependent. Sending money to a relative now and then will most likely not mean they are your dependent. You generally must provide over half of their financial support, be related to them, and live with them. Here is an overview of dependent requirements:
Children
You can claim your child as a dependent as long as they are related to you, are adopted, or are an eligible foster child. You can also claim a child who is a stepchild, brother, sister, or half-sibling. Children must be under age 19 or under 24 if they’re full-time students. Children with permanent and total disabilities do not have an age limit requirement. Eligible children must live with you for more than half the year, and you must financially support them, giving them at least half of what they need.
A Relative
Claiming a relative as a dependent requires that they live with you (with certain exemptions). There are income caps for relatives to be dependents: They must make less than $4,300 in the 2020 and 2021 tax years. You need to support them financially at more than half of their required support throughout the year.
Other Requirements
Dependents also must meet these additional requirements:
- They are a U.S. citizen, national, or resident, or a resident of Canada or Mexico.
- No one else is claiming them as a dependent on their tax return.
- They are not filing a joint tax return with their spouse, if married.
Always make sure your dependent meets these requirements before trying to claim them on your tax return. Note that foreign exchange students or people who work for you usually don’t qualify. Talk to a tax expert or attorney who can assure you whether or not your family member or child qualifies under tax law.
6 Steps to Claiming a Dependent on Your Tax Return
Determining whether you can claim a dependent is the first step to getting substantial tax savings. You then have to show the IRS why your situation qualifies and include all relevant information with your annual tax return. Here are six easy steps to follow when claiming a dependent:
1. Gather Your Information
You will need certain details to claim a dependent, so be prepared before you start filing your return. Information you’ll give the IRS includes your relationship to the dependent, how much support you provide, your marital status, your adjusted gross income, and terms of multiple-support agreements you may have, which apply if no one person provides over half of the dependent’s support. You will also need all information about the dependent you are claiming, including their full name and Social Security number.
2. Use the IRS Website
The IRS website has an Interactive Tax Assistant (ITA) tool that walks you through basic questions to determine dependent eligibility. This tool is an excellent way to make sure you can claim a dependent based on your situation and tax year.
3. File Form 1040 or 1040A
You will need to file Form 1040 or Form 1040A if you are claiming a dependent, not Form 1040EZ. Answer all questions about dependents on the form.
4. Claim the Child Tax Credit
You may be able to claim the child tax credit, which usually applies to children under age 17. This credit can reduce your tax burden significantly. The credit for 2020 is $2,000 per eligible child under 17, and for 2021 it’s $3,000 for children under 18 or $3,600 for children under age 6. Children must qualify as dependents.
5. File on Time
Make sure you file your tax return by the deadline with all your dependent information.
6. Talk to a Tax Expert
You may not always know for sure if you can claim a dependent. Maybe you are caring for an aging family member and provide most of their support and want to claim them on your tax return. Talk to someone who knows the answers you’re seeking. Tax professionals are familiar with changing tax laws and will help you claim a dependent and file your tax return on time.
Claiming a dependent doesn’t have to be a long process or overwhelming for you. Just make sure your relative or child qualifies and submit an accurate, timely tax return to take advantage of tax benefits you may be eligible for.
Contact Tax Experts With Questions About Claiming a Dependent
It can sometimes be tricky to determine dependent eligibility on your own. The team at Silver Tax Group is ready to help you assess your situation, understand the credits and deductions you qualify for, find out who you can claim as dependents, and much more. We provide tax consulting services, emergency tax assistance, litigation, tax debt relief help, and other services to give you peace of mind.
Ready to get started? Reach out to our team to speak to a tax expert about claiming a dependent on your annual tax return.
