You may only think of a minor child who is living with you when you think of a “dependent”. While this is true, you will want to remember that a dependent could also include children who do not live with you, a parent, or another relative.
Definition of a dependent. Qualifying children or other relatives can be classified as a dependent. In general, a dependent is someone who lives with you and meets the criteria for certain tests, including a support test, but there are also specific rules that apply. The support test for qualifying children means, for the year, the child cannot have provided more than half of his or her own support. You generally must provide more than half of a qualifying relative’s support for a year to pass the support test as well. Keep in mind, there are exceptions and situations may vary. Certain relatives, for example, are required to reside with you however, parents don’t have to live with you if they otherwise qualify. In the case of divorced, noncustodial parents, the child isn’t required to be living with you for you to take the dependent deduction.
Who can’t be claimed? You can never claim your spouse nor can you claim a married person who, with their spouse, files a joint return. Additionally, for a portion of the year, a dependent must be a U.S. citizen, resident alien, national, or a resident of Canada or Mexico.
Exemptions and your taxable income. On your 2016 and 2017 federal income tax returns your taxable income will be reduced by $4,050 for each dependent deduction. When your adjusted gross income reaches a certain level, part of the benefit will be lost. The phase-out begins at $259,400 for single filers and $311,300 when you’re married filing jointly.
Though it may seem simple, claiming an exemption for a dependent can prove to be quite complex in certain situations. The ability to claim someone as a dependent may lead to additional tax benefits such as the child tax credit, education credits and the dependent care credit, so you will want to make sure you get it right.
If you need assistance determining who qualifies as your dependent, contact our office. You will get the most out of your federal income tax exemptions by meeting with a member of our tax team.
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