Tax season is upon us and as your life changes each year, so does the way you file taxes. One of the biggest changes can be when you have a child or when your parent moves in with you. Both of those changes can give you the opportunity to save money by claiming them as your dependent.
For every qualified dependent you claim, you can reduce your 2017 taxable income by $4,050. That can add up to a lot of money, but how do you know who qualifies as a dependent? Well, there are two types of dependents and each type is subject to different rules. For both types of dependents, the dependent must be a U.S. citizen or a resident of Canada or Mexico. You also can’t claim someone who takes a personal exemption for their self or claims another dependent on their own tax form. This also applies to someone who is married and files a joint tax return.
For qualifying a child as a dependent, you must meet all the following requirements:
- They must be related to you
- Under the age of 19 unless they are a full-time student then it’s under the age of 24
- They must have lived with you for at least half a year (some exceptions may apply)
- If your child has a job, it cannot provide more than half of their support
- The child must only be claimed by one person
Dependent rules also apply to other benefits, such as tax credits. Many of these credits are available only if you have qualified dependents. For example, both the child tax credit and the earned-income tax credit rely on these rules.
Many people also take care of their aging parents which can be qualified as a dependent under the following requirements:
- Your relative must live with you all year or be on the list of relatives who do not live with you in Publication 501
- Your relative cannot have a gross income of more than $4,050 in 2017
- You must provide more than half of your relative’s total support each year
- You must be the only person claiming them on your tax return
If you have any questions or concerns, or need help filing, Polston Tax has a team of tax preparers that can help you not only find every deduction you deserve, but make sure you file your return quickly and accurately. Call us today at 844-841-9857 or fill out the form on our website for a free no-risk consultation.