For claiming the dependency exemption, a dependent is either a qualifying child or qualifying relative.
A qualifying child must satisfy all six of the following tests:
1. Relationship: The child must be the taxpayer’s child or stepchild (by blood or adoption), foster child, sibling or stepsibling, or a descendant of one of these.
2. Age: The child must be under the age of 19 at the end of the year and younger that your (or your spouse, if filing jointly), OR under the age of 24 at the end of the year, a full-time student for at least 5 months of the year and younger than you (or your spouse, if filing jointly), OR any age if permanently and totally disabled at any time during the year.
3. Residence: The child must have the same principal residence as the taxpayer for more than half the year. Exceptions apply in certain circumstances for children of divorced or separated parents, kidnapped children, temporary absences, and for children who were born or died during the year.
4. Support: the child must not provide more than one-half of his or her own support for the year.
5. Filing Status: the child is not filing a joint return for the year (unless that return is filed only as a claim for a refund).
6. Tie-breaker rules: the child must only qualify as your qualifying child or if the child meets the rules to be a qualifying child of more than one person, you must be the person entitled to claim the child as a qualifying child based on the tie-breaker rules.
A qualifying relative must satisfy all four of the following tests:
1. Relationship Test: The person cannot be your qualifying child or the qualifying child or any other taxpayer.
2. Member of Household/Relationship Test: The person must have lived with the taxpayer for the entire year, OR be related to the taxpayer. The following are considered relatives:
*taxpayer’s child, stepchild, adopted child, grandchild or great-grandchild
*taxpayer’s son-in-law or daughter-in-law
*taxpayer’s parent, stepparent, parent-in-law, grandparent or great-grandparent
*taxpayer’s brother, sister, half brother, half sister, stepbrother, stepsister, brother-in-law or sister-in-law
*taxpayer’s aunt, uncle, nephew, or niece, if related by blood
*foster child who was placed with the taxpayer by an authorized agency
3. Support Test: The taxpayer must provide over half the person’s support during
the year. There are special rules for children of divorced or separated parents.
Support includes amounts actually spent on food, clothing, a place to live,
medical and dental care, education, recreation, transportation, and similar
necessities.
4. Gross Income Test: Generally, the person’s gross income must be less than $3,650. This does not include nontaxable income such as welfare benefits or nontaxable Social Security benefits.
More information is available in IRS Publication 501 at www.irs.gov
If you have any questions please call us at 610-485-1010.
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This is a guest blog by Jacqueline M. Ward, who is the Tax Operations Manager (TOM) at "Your Best Interest" Financial Services Inc. She combines her education in accounting, years of experience and attention to detail to provide her clients with confidence and peace of mind that their tax returns are completed accurately and in a timely manner. Jackie is the mother of 7 children, 2 girls and 5 boys. Two of her sons are presently serving our country in the military; one in the U.S. Marine Corps and the other a midshipman at the United States Naval Academy.
To contact Jackie call 610 485-1010 or email her at jward@ybifs.com