When filing a federal tax return, you may be able to claim a dependent, which can reduce your taxable income and make you eligible for valuable tax credits like the Child Tax Credit or the Credit for Other Dependents. However, the IRS has strict rules regarding who qualifies as a dependent under the tax code.
There are two main types of dependents:
- Qualifying Child
- Qualifying Relative
These categories have different requirements, which are outlined below.
1. Qualifying Child
A qualifying child must meet all of the following five tests:
A. Relationship Test
The child must be your:
- Son, daughter, stepchild, foster child, or adopted child
- Brother, sister, half-sibling, or step-sibling
- A descendant of any of these (such as a grandchild, niece, or nephew)
(Internal Revenue Code [IRC] §152(c)(2))
B. Age Test
The child must be:
- Under age 19 at the end of the tax year, OR
- Under age 24 if a full-time student (attending school at least five months of the year), OR
- Any age if permanently and totally disabled
(IRC §152(c)(3)(A))
C. Residency Test
The child must have lived with you for more than half the year. Exceptions exist for temporary absences, such as military service, school, or medical treatment.
(IRC §152(c)(1)(B))
D. Support Test
The child must not have provided more than half of their own support (e.g., food, housing, medical care). This means if the child works but doesn’t fully support themselves, they can still qualify.
(IRC §152(c)(1)(D))
E. Joint Return Test
The child cannot file a married filing jointly return unless they are only filing to claim a refund and have no tax liability.
(IRC §152(c)(1)(E))
Example:
Lisa, age 17, is a high school student and lives with her parents all year. She does not earn any income and her parents fully support her. Lisa qualifies as a dependent under the Qualifying Child rules.
2. Qualifying Relative
If a person does not meet the Qualifying Child criteria, they may still qualify as a Qualifying Relative, but must pass four tests:
A. Not a Qualifying Child Test
The person cannot be the qualifying child of anyone else.
(IRC §152(d)(1)(D))
B. Relationship or Residency Test
The person must either:
- Be a relative, such as a parent, grandparent, aunt, uncle, in-law, or step-relative (but not a cousin) OR
- Have lived with you all year as a member of your household
(IRC §152(d)(2))
C. Gross Income Test
The person’s gross income must be below $4,700 (for tax year 2023, this amount is adjusted for inflation). Gross income includes wages, taxable Social Security, and other sources of taxable income.
(IRC §152(d)(1)(B))
D. Support Test
You must have provided more than 50% of their total support for the year.
(IRC §152(d)(1)(C))
Example:
John supports his elderly mother, who earns $3,500 per year in Social Security benefits and lives with him. Since she has low income and John provides most of her support, she qualifies as his dependent under the Qualifying Relative rules.
Additional Rules and Restrictions
1. Citizenship or Residency Requirement
The dependent must be:
- A U.S. citizen,
- A U.S. resident alien, OR
- A resident of Canada or Mexico
(IRC §152(b)(3))
2. Dependent Cannot Claim Their Own Dependent
If a person is claimed as a dependent, they cannot claim their own dependents.
3. Special Rules for Divorced or Separated Parents
Generally, the custodial parent claims the child as a dependent. However, the noncustodial parent may claim the child if the custodial parent signs Form 8332, “Release/Revocation of Claim to Exemption for Child by Custodial Parent.”
(IRC §152(e))
