Tax Day will be here before you know it and that means it’s time to start gathering all of the documents and other information you’ll need for filing (if you haven’t already). One aspect of filing of your taxes that can be confusing is claiming dependents. Here is a simple guide to help you determine who is a dependent.
WHY CLAIM A DEPENDENT?
Claiming a dependent in your tax filing can help you save money. In addition to dependents, there are also associated tax credits that can help you save additional funds.
WHO CAN I CLAIM?
When it comes to claiming a dependent, there are two basic categories: a qualifying child and a qualifying relative.
A qualifying child must:
- Be related to you – This can be a biological child, an adopted child, eligible foster children, etc.
- Meet the age requirement – Your child can only be claimed as a dependent until they are 19 years old UNLESS they are a full-student, in which case the maximum age becomes 24.
- Live with you – In some cases, a dependent must live with you for at least half the year, although there are exceptions to this, so reach out to a tax professional with your questions.
- Be financially supported – Any job that the dependent has must not provide more than half of their financial support.
In most cases, a child can only be claimed as a dependent on one tax return. If you and their other parent file separately or you’re no longer together, reach out to a tax professional to help you with these guidelines.
A qualifying relative must:
- Live with you – Unless they are included on an exempt list, this type of dependent needs to live in your home all year.
- Meet income requirements – Throughout the 2018 calendar year, the dependent must not have made more than $4,150.
- Be financially supported – Claiming them as a dependent means you are responsible for more than half of their yearly financial support.
Again, this person can only be claimed on one tax return. For example, if a relative, such as a nephew, lives with you, you can’t claim them if their parents also claim them. Make sure everyone is on the same page before filing your taxes.
DISCLAIMER: This article is intended to be a helpful guide. If you have specific questions or concerns regarding your financial situation, please reach out to an accountant or other financial advisor.