Dependents are usually your children, but they can be parents, siblings, or other relatives so long as they meet the requirements. A dog though, is never considered to be a dependent.
Photo by Janice E. Roberg
If you’re doing your taxes this year, one of the questions you’ll be asked is, “Do you have any dependents?” What exactly is a dependent anyway?
Most often, but not always, a dependent is your kid. Sometimes, a dependent can be a parent, a sibling, and even in some cases a friend that lives with you. There are many requirements that you’ve got to meet for a person to qualify as a dependent. In general though, a dependent is someone that you support.
There are two types of dependents:
- Qualifying child: that’s going to be a child or a disabled relative that will qualify you for the Earned Income Tax Credit (EIC)
- Qualifying relative: a qualifying relative will get you an exemption for your taxes, but won’t qualify you to get EIC
Let’s look at the Qualifying child first. How does the IRS define what a qualifying child is? Remember, the IRS has weird rules, and it’s not the same as how your family decides who’s related or not.
A Qualifying Child must have a valid social security number to qualify for EIC. If your child doesn’t have a social security number, but she gets one later, you can go back for up to three years to amend the returns. In addition to a social security number, for EIC a Qualifying Child must also meet the following tests:
Relationship: Son, daughter, adopted child, stepchild, foster child or a descendent of any of them such as a grandchild, or, a brother, sister, half brother, half sister, step brother, step sister or a descendant of any of them such as a niece or nephew. Please note that an adopted child or foster child must be placed by the courts. You’ve got to have legal documentation to support your claim; you can’t just take in your neighbor’s child and call her a foster child.
Age: At the end of the filing year, your child has to be younger than you (or your spouse if you file a joint return) and younger than 19; or younger than 24 and a full-time student; or permanently and totally disabled.
Residency: The child must live with you (or your spouse if you file a joint return) in the United States for more than half of the year.
Joint Return: The child cannot file a joint return for the tax year unless the child and the child’s spouse did not have a separate filing requirement and filed the joint return only to claim a refund.
For more details on what is a Qualifying child for EIC purposes, check out this link: http://robergtaxsolutions.com/2012/05/eic-and-your-family-tree-what-counts-as-a-qualifying-child/
Now one of the most common questions I hear about EIC is, “My boyfriend lives with me and my child, but he’s not her biological father, can he claim my daughter for EIC?” The answer is “NO” because the child doesn’t meet the relationship test to the boyfriend.
But, the boyfriend might be able to claim the child as a dependent for an exemption—just not claim EIC for her, because she may be a Qualifying Relative to the boyfriend instead of a Qualifying Child.
Rules for claiming a Qualifying Relative:
In order to be a Qualifying Relative the person can’t be a qualifying child.
The second is to pass the member of household or qualifying relative test. Either the person lives with you for the entire 12 months of the year, or is related to you in your immediate blood line: your brothers and sisters, and their direct descendants, and their direct ancestors (but not foster parents.) Also, your in-laws are included here—even if you divorce, as far as the IRS is concerned, your mother-in-law is your mother-in-law forever. (Heaven help us all!) If, however, a person was at any time during the year your spouse, he or she can’t be your qualifying relative. (I know, that looks like a typo—once you marry ‘em, you can’t be related to ‘em.)
With the qualifying relative rule there is a gross income test: a qualifying relative can’t make more than the standard exemption in income, which for 2017 is $4,050. This means taxable income. If your mother’s only income was $6000 a year from Social Security, that’s not taxable so she’d meet the gross income test.
The last requirement is support: you have to provide your qualifying relative with more than 50% of his or her support. So, back to your mom on Social Security, if she makes $6,000 a year, and spent it all on food and rent, then you’d have to pay at least $6,000 more towards her support.
The rules for Qualifying Relative and Qualifying child can get pretty confusing, especially if you’ve got a unique situation. The IRS website has a tool to help you decide if you can claim a dependent or not. As you go through the questions, remember to answer them honestly and you’ll get a reliable answer. Sometimes people change their answers to get the result they want—that’s how you get into IRS trouble. Answer honestly and claim what you can, don’t claim what you can’t and you won’t have any problems.
Hi Marie,
You need to read this post: http://robergtaxsolutions.com/2011/11/split-exemption-claiming-one-child-on-two-tax-returns-%E2%80%94-the-legal-way/
Bottom line, your ex can claim the exemption and the child tax credit. You get to claim the EIC and you get the Head of Household filing status. Also, if your child is in daycare, you also get the daycare credit also.
Hi,
I was wondering…
According to my divorce decree my ex husband gets to claim one of our kids every other year on his taxes. I understand he is entitled to do so even though they don’t live with him for more than 50% of the time, nor does he provide more than 50% of their financial support.
However, am I still entitled to claim the Child Tax Credit or Earned Income Credit even when it’s his year to claim the child as a dependent on his taxes? If not, am I entitled to claim anything as a tax credit? I have primary physical custody but we have joint custody together.
Thanks so much in advance! 🙂
Hi Diane L.,
Wow. Interesting questions. Let me tackle the easy one first–why does taxation have to be so confusing? So that I can have a job! That’s why! (I know you said I didn’t have to answer that, but it was the easy one so I went for it.)
Okay, now to the real stuff. So many issues.
First, the biggest challenge to claiming an exemption is the money. With her SSDI, you need to provide more than half of her support So if she gets $10,000 a year, you need to spend $10,000 towards her support. It looks like 2014 might be easy for you, but once she gets her SSDI it might not.
But remember, if you’re paying the mortgage, food, real estate taxes–you might easily be there. The issue will be if you have low income, are you really providing more than half of her support?
But, I’m assuming that you do so even if she weren’t your daughter, even if she were some stranger you meet on the street and you took her into your home and she lived with you for the entire year, since she had no income, you may claim her as a dependent.
When I’m talking about income, I mean wages, or pension, or interest. SSDI does not count as income. You need to provide more than half of her support–and the SSDI does count as money used for her support, but it doesn’t count as income for tax return purpsoes. Do you understand the difference there? Good. (I’m assuming you just said yes.)
Okay, so if you meet the income requirement, it doesn’t matter if she’s your daughter or a stranger, as long as she’s lived with you for the entire year, you may claim her as a dependent. This would be considered a “qualifying relative”–even if she weren’t related. That’s the IRS term.
Now here’s the trickier part. Right now, I think your daughter qualifies as a qualifying relative pretty easily, but there’s another status “qualifying child” that will be more difficult but might be a better status for you.
Since your daughter has become disabled, instead of just claiming her as a dependent you may be able to claim her as a disabled child no matter how old she is. What’s the difference? It would be in your ability to claim the Earned Income Tax Credit. Here’s the kicker–if your income is low enough to claim EIC, then it’s going to be harder to prove you provided more than half of the support once she gets her SSDI.
But, you could be in a sweet spot where you can easily claim that you provide support and still qualify for EIC. And if you do, you’ll at least want to try.
Now, if you do the IRS worksheets, they ask if the person is your biological child. Why yes, yes she is. That’s an honest answer. And if you finish off the worksheet, you get that you can claim her.
Granted, the IRS worksheets don’t say, “but did you give that biological child up for adoption?” I worked on a different case where the adoptive parent and the biological parent were fighting and the adoptive parent won the EIC–but you and the adoptive parent aren’t fighting so that won’t be your issue.
So I’m inclined to go for the EIC.
Now, your concern is your documentation. I’m thinking that you’re more likely be asked to provide proof of disability than proof of parenthood. But if you would be asked, I’m thinking that the adoptive parents would provide a birth certificate and a letter of explanation to go with the certificate of live birth that you have.
If you’re worried about the EIC claim, one way to protect yourself is to file your return with your daughter as a “qualifying relative” first. Let it process, get your refund, or pay the tax. Wait until it’s done. Then, file an amended return claiming her as a “qualifying child” and claiming EIC. Put in the explanation that she is your biological child, etc, etc, etc.
The reason I say this is because then the IRS will actually have a human being read the return and make a determination. So if it’s approved, you can feel 100% confident that the IRS is okay with your claiming her. And you’ll have that a your backup for future years of claiming your daughter. Sort of a little “audit insurance”.
No matter which way you choose, I think you’re wise dotting your i’s and crossing your t’s about your paperwork, as I do think you’re likely to get some kind of IRS letter. (Miraculously after all these years you’ve got an adult, disabled child on your tax return.) Major changes do tend to make the IRS take a second look.
I also think you’ve got a really good case–using the IRS’s own rules. If I were doing the return, I would file and claim your daughter and the EIC, but I’d tell you to keep the EIC portion of the refund in the bank for awhile, just to be safe.
Question for you. My birth daughter and I were re-united two years ago. She has lived with me and my husband for more than the past year. She is permanently disabled and received her approval for SSDI effective November 2014. We have provided for her living expenses, over and above what she receives in “foodstamps” and health care through the state, but we pay her travel expenses and some medication co-pays.
My daughter was adopted; therefore, she does not carry my maiden name. She is currently 50 years of age. The legal connection is missing, i.e. no birth certificate with my name on it. The birth certificate is has is a “Certification of Live Birth” from California and issues by the Secretary of State there.
Her adoptive family lives in another state and they do not deduct for her, but neither were they aware that she is disabled. BTW, we all get along wonderfully! I cannot thank them enough for all that they did for “our” daughter.
In short, I have no actual legal proof that she is my daughter. We look almost like twins, but the tax authorities do not see pictures…
Would my husband and I qualify to take an extra deduction on our taxes?
Does our situation qualify us for the EIC?
Why does taxation have to be so confusing? No need to answer that question. LOL
Hi Diane,
It’s good to hear from you again. I remember you. How could I forget the pleasant surprise? Diane was very kind and surprised me with a Starbucks gift card She called the Starbucks that was in the building my old office was at and they hand delivered it to me It was the nicest surprise!
Sadly, I don’t have any good information for you. You’re right that your legal expenses are not deductible. Also, because of privacy laws, you will never be able to get your hands on those old tax returns that your grandchild’s father filed. Not unless he gives them to you.
Basically, I’m going to give you the same lame advice that you’d get from any of the big box tax places on the corner–file your tax return early. I hate giving that advice, but it’s your best protection against fraud.
Sadly, the people in your situation often can’t file early because you’re waiting for investment or retirement information which often comes later than w2 information. That’s right, you get penalized again for being responsible.
On the plus side, you’ve got an adorable 4-year-old living with you to remind you that clouds are awesome; chocolate chip cookies are the greatest thing in the world; and Christmas-wow, Christmas with a 4-year-old. How cool is that? I realize that you’ve got your work cut out for you, but there’s a part of me that’s just a little bit jealous.
Good evening Ms. Roberg,
A few years back, you answered several questions for me when my almost 4 yr old grandson, who has lived with me since his birth, was falsely claimed by another person so they could receive a sizeable Earned Income Credit. You told me what to expect when I filed my taxes, and what information to submit to the IRS to legally claim my grandson.
Fast forward a couple years…..I am now in the process of obtaining a legal guardianship of my grandson. Baby daddy is currently in prison. It is my understanding he and his mother fraudulently received the Earned Income Credit for the year of his birth. Is there any way I can have access to this information?
In addition to having the privilege of raising my grandson, I have had to hire an attorney to obtain this guardianship. I would like to know I am protecting him properly by making sure his social security number is in fact no longer being used.
I also am beginning to learn how many grandparents are stepping in to raise grandchildren, and how little help is available to assist grandparents with added expenses during the years that were intended to be retirement years.
If my research is correct, I am not even allowed to used legal expenses as a deduction.
Your 2 cents worth would be appreciated……
Is there a Starbucks near your new location?
Thanks,
Diane