What Is A Qualifying Dependent?
A qualifying dependent is defined by the Internal Revenue Service as a child under the age of 19, a full-time student under the age of 24, or an individual of any age who is permanently and totally disabled.
Taxpayers financially responsible for qualifying dependents may qualify for tax credits or tax deductions.
- A qualifying dependent is a child under the age of 19, a full-time student under the age of 24, or an individual with a permanent and total disability that a taxpayer can claim on their tax return to reduce their tax liability.
- A qualifying child must be the taxpayer’s child, stepchild, adopted child, half-child, or the offspring of one of these individuals, be 19 or younger or 24 or younger if they are a student, live with the taxpayer for more than half of the year, and be financially supported 50% or more by the taxpayer.
- A qualifying relative must live with the taxpayer all year or be one of the exceptions, have a gross income of less than $4,400 in 2022, and have 50% of their financial needs supported by the taxpayer to be considered a qualifying dependent.
- Taxpayers who claim dependents on their tax returns can achieve tax savings by claiming tax credits and tax deductions, such as the adoption credit, child tax credit, child and dependent care credit, earned income tax credit, head of household filing tax deductions, and medical expense tax deductions.
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Qualifying Dependent Eligibility Requirements
To be considered a qualifying dependent, which could be a qualifying child or a qualifying relative, an individual must meet the following 3 qualifications:
A qualifying child must:
- Be related to the filing taxpayer as their son, daughter, stepchild, adopted child, foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or the offspring of any of these family members.
- Be under the age of 19, a full-time college student under the age of 24, or of any age if they are permanently and totally disabled.
- Live with the taxpayer for more than 6 months of the year.
- Be more than 50% financially supported by the taxpayer.
People who are responsible for taking care of a family member who isn’t their child, such as an aging parent, may be able to claim them as a qualifying relative on their tax return.
A qualifying relative must:
- Live with the taxpayer all year or qualify as one of the 30 types of “relatives who do not live with you” listed in Publication 501.
- Have a gross income of less than $4,400 in 2022.
- Provide more than half of the financial support required for the relative throughout the year.
In addition to the specific eligibility requirements for qualifying children or relatives, to be considered a qualifying dependent, an individual must meet the following 3 general qualifications:
For an individual to claim a dependent on their tax return, they must be the only person who is claiming them as a dependent. Additionally, the potential dependent must not have stated on their own tax return that they are unable to be claimed as a dependent. Furthermore, the potential dependent mustn’t have claimed someone else as a dependent on their tax return.
Citizenship or Residency
The dependent is a U.S. citizen, U.S. resident, U.S. national, or a resident of Mexico or Canada.
Joint Tax Return
Individuals who are married and filing a joint tax return cannot be claimed as a dependent. However, this rule does not apply if the only reason the dependent filed a joint return was to claim a tax refund of estimated taxes paid or income tax withholdings.
Tax Benefits Of Claiming Qualified Dependents
The purpose of the Adoption Tax Credit is to help offset some of the costs of adopting a child. In 2023, parents can claim the adoption tax credit to offset adoption expenses up to $15,950.
Child Tax Credit
The Child Tax Credit can be claimed for up to $2,000 per qualifying dependent for taxpayers whose modified adjusted gross income is $200,000 or below for single filers or $400,000 or below for people whose filing status is married filing jointly. There is also a refundable portion of this tax credit worth up to $1,600, known as the Additional Child Tax Credit.
Child and Dependent Care Credit
The Child and Dependent Care Credit is a refundable tax credit worth between 20% and 50% of qualifying expenses up to $3,000 for one dependent or $6,000 for two or more dependents.
Earned Income Tax Credit
The Earned Income Tax Credit (EITC) for 2023 is worth between $600 and $7,430 depending on the taxpayer’s income, filing status, and the number of dependents they claim on their tax return.
Head of Household Filing Status
Taxpayers who file their tax return with the head of household filing status may achieve more favorable tax deductions and tax brackets than those who file as a single taxpayer.
Medical Expense Deduction
Qualifying dependents rely on their family members to cover housing, food, clothing, education, and healthcare expenses, which is why there are tax credits and deductions to help people provide long-term care to dependents. As a dependent, they can be added to the taxpayer’s medical, dental, and vision insurance, which can help with the costs of prescriptions, in-patient and out-patient healthcare, substance abuse and addiction counseling, and therapy to promote mental health. The parent can then deduct qualifying medical expenses that exceed 7.5% of their gross income.
If you and/or your spouse are financially responsible for one or more qualifying dependents, you can minimize your tax bill by claiming dependents when you file your federal income tax returns. If you have any questions about filing taxes with dependents or optimizing your tax breaks, set up a free consultation with the tax experts at Ideal Tax to get started on your tax-saving journey.