13 Dec Claiming Dependents: 10 Things You Need to Know
Posted at 12:00h in Tax Tips
Every year is someone’s first for claiming dependents. Whether you have children or an elderly parent, this is all reflected in your tax return. When reported correctly, this can give you some big deductions that you’ll surely need.
Here are 10 things you need to know about claiming dependents.
- They must live with you for six months at least. This one is self-explanatory. If the person you are trying to claim didn’t live with you for at least six months out of the year, then you can’t claim them.
- You must provide at least 50% of their support. This includes things like food, clothing, and housing. You must provide at least half of a dependent’s necessities to claim them. The IRS has a quick interactive assistant that will help you determine if you meet these criteria.
- The $2000 deduction. If you have a dependent 17 or younger, then you qualify for a $2000 deduction on your return. If a dependent is 18 or older, then that deduction drops down to $500. This deduction is refundable as well, so it could grant you some extra cash in the spring.
- They must be a U.S. citizen. If you’re trying to claim someone who isn’t a U.S. citizen, don’t bother. You won’t get a deduction for them. They also need a Social Security Number.
- They must be related to you in some way. Children. Parents. Grandparents. Aunts. Uncles. You get the picture.
- You can claim adult dependents. Claiming dependents isn’t exclusive to children. Sometimes, you find yourself taking care of parents or other relatives. In that case, you can still get a deduction or tax credit for them.
- Siblings can take turns. If multiple people are taking care of an elderly relative, they can take turns claiming the deduction with the use of Form 2120. That way, no one feels like they’re getting stiffed.
- Watch for kiddie tax. If your child has any unearned income over $1050, then you can launch yourself into higher tax brackets, ultimately increasing your bill. If they just so happen to be college-age, then consider a Section 127 plan for a bigger deduction.
- Only one person can claim a dependent. This isn’t an issue if you’re married filing jointly. However, if you’re separated from your spouse and take turns with the dependent in question, only one of you can claim them on your return.
- You cannot claim your spouse/significant other. Even if your spouse/significant other doesn’t work, you cannot claim them as a dependent. Depending on the situation, they’ll be listed on your joint return or have to file their own.
Have any other questions about claiming dependents? Need help on your 2019 return? Call us at 614-524-4888!