Question & Answer: Discuss the requirements for, and the differences of, the qual…..

Qualifying child dependency exemption:

A qualifying child must satisfy 5 requirements listed in IRC §152 (c):

1. The qualifying child must satisfy the relationship requirement, by being 1 of the following:
   • son or daughter, either as a natural child or stepchild, or a descendant thereof;
   • sibling, stepsibling, or a descendant thereof;
   • foster or adopted child.
2. The individual must, by the end of the calendar year, be younger than 19 or younger than 24 if a full-time student. There is no age limitation for a permanently disabled child.
3. Dependents must have the same principal residence as the taxpayer for more than ½ of the year. This residency requirement excludes temporary absences such as for illness, school, vacation, or military service where the child has every intention of returning. However, special rules apply to children of divorced or separated parents. A child who is either born or dies during the tax year is considered to have lived with the taxpayer for the entire year if the child lived in the taxpayer’s home while still alive.
4. The claimed dependent must not provide more than ½ of her own support during the year. However, income from scholarships is not considered support.
5. Only 1 dependent can be claimed by 1 individual, so in those cases where more than 1 taxpayer can claim a dependent, the taxpayers must decide who will claim the exemption.

If a child fails to meet all the requirements of a qualifying child, the individual may still be claimed as a qualifying relative, if they meet the requirements.

Qualifying relative dependency exemption

A qualifying relative includes all of the relationships defined for a qualifying child, but also includes (IRC §152 (d)):

• half-brothers and half-sisters;
• parents, grandparents, or other direct ancestors;
• stepparents, aunts or uncles, nieces or nephews;
• sons- and daughters-in-law, father-in-law, mother-in-law, and brothers- or sisters-in-law;
• or any individual who lived the entire year in the taxpayer’s principal place of residence and is also a member of the taxpayer’s household.

However, nieces, nephews, aunts, and uncles, can only be claimed if they are blood relatives of the taxpayer claiming the dependency exemption.

A qualifying relative must also satisfy all of the other requirements of a qualified child, except that parents or grandparents do not have to satisfy the residency requirement. For instance, even if the parent lives elsewhere, a child providing for more than half of the parent’s support can claim a dependency exemption for the parent.

The taxpayer must provide more than ½ of the individual’s support for the calendar year, and the dependent’s gross income must be less than the personal exemption. For a qualifying relative, gross income, which is gross income without any deductions, is considered in deciding whether the qualifying relative earned at least the personal exemption amount. Any income that is excludable, such as exempt interest, disability, or Social Security payments, is not included in the gross income, but is considered for determining whether the taxpayer has furnished more than half of the dependent’s support.