Jeanetta Doran maintains a home for her son (Rick) and her mother-in-law (Cristina) who is a widow. Since 2015 she has provided more than one half of their support. Jeanetta’s husband (Mitchell) left her in March 2015 and has not been heard from other than one communication in which he indicated that he planned to claim Rick and Cristina as his dependents in his 2015 tax return.
Rick is 19. He is a full-time student at the local community college. In 2015 he earned $9,000 and in 2016 he earned $18,000. Rick has been putting most of his earnings in a savings account to save up for future college tuition payments. Cristina’s income consists only of $12,000 in social security benefits.
For 2015 Jeanetta filed married filing separately with no dependents. She has not filed her 2016 return yet and is seeking your advice on her 2015 and 2016 tax returns.
Issue: What is the most optimal outcome for Jeanetta’s taxes?
IRS rules for qualifying dependents cover just about every conceivable situation, from housekeepers to emancipated offspring.
Fortunately, most of us live simpler lives. The basic rules will cover almost everyone. Here’s how it all breaks down.
There are two types of dependents, each subject to different rules:
- A qualifying child
- A qualifying relative
For both types of dependents, you’ll need to answer the following questions to determine if you can claim them.
- Are they a citizen or resident? The person must be a U.S. citizen, a U.S. national, a U.S. resident, or a resident of Canada or Mexico. Many people wonder if they can claim a foreign-exchange student who temporarily lives with them. The answer is maybe, but only if they meet this requirement.
- Are you the only person claiming them as a dependent? You can’t claim someone who takes a personal exemption for himself or claims another dependent on his own tax form.
- Are they filing a joint return? You cannot claim someone who is married and files a joint tax return. Say you support your married teenaged son: If he files a joint return with his spouse, you can’t claim him as a dependent.
In addition to the qualifications above, to claim an exemption for your child, you must be able to answer “yes” to all of the following questions.
- Are they related to you? The child can be your son, daughter, stepchild, eligible foster child, brother, sister, half brother, half sister, stepbrother, stepsister, adopted child or an offspring of any of them.
- Do they meet the age requirement? Your child must be under age 19 or, if a full-time student, under age 24. There is no age limit if your child is permanently and totally disabled.
- Do they live with you? Your child must live with you for more than half the year, but several exceptions apply.
- Do you financially support them? Your child may have a job, but that job cannot provide more than half of her support.
- Are you the only person claiming them? This requirement commonly applies to children of divorced parents. Here you must use the “tie breaker rules,” which are found in IRS Publication 501. These rules establish income, parentage and residency requirements for claiming a child.
Many people provide support to their aging parents. But just because you mail your 78-year-old mother a check every once in a while doesn’t mean you can claim her as a dependent. Here is a checklist for determining whether your mom (or other relative) qualifies.
- Do they live with you? Your relative must live at your residence all year or be on the list of “relatives who do not live with you” in Publication 501. About 30 types of relatives are on this list.
- Do they make less than $4,050 in 2016? Your relative cannot have a gross income of more than $4,050 in 2016 and be claimed by you as a dependent.
- Do you financially support them? You must provide more than half of your relative’s total support each year.
- Are you the only person claiming them? This means you can’t claim the same person twice, once as a qualifying relative and again as a qualifying child. It also means you can’t claim a relative—say a cousin—if someone else, such as his parents, also claim him.
So considering the above, Jeanetta can claim dependent for her son Rick if not claimed by her husband.
But for Cristina cannot claim as dependent as she is earning more than $4050.