IMPORTANT TAX LAW CHANGE: Exemptions were suspended by the Tax Cuts and Jobs Act of 2017. You can’t claim any exemptions on your taxes for any tax years between 2018 and 2025. However, various tax credits may be available for your dependents under this 2017 tax act. As a result, the below discussion is still relevant in the determination of the availability of certain tax credits such as the child tax credit, the additional child tax credit, other dependent credit, or the earned income tax credit that are tied into the definition of dependent.
A taxpayer may claim an exemption on his or her federal income tax return for each person he or she can claim as a dependent. A person can be claimed as a dependent only if he or she is a “qualifying child” or a “qualifying relative” of the taxpayer. This article explores the following requirements for claiming a dependency exemption based on being a qualified relative.
To meet the qualifying relative test, a person must either:
If at any time during the year the person was your spouse, that person cannot be your qualifying relative.
A person related to you in any of the following ways does not have to live with you all year as a member of your household to meet this test:
Any of these relationships that were established by marriage are not ended by death or divorce.
The relative’s gross income for the year must be less than $4,300 in 2020. Gross income includes all income in the form of money, property and services that is not exempt from tax, such as receipts from rental property, a partner’s share of gross partnership income and unemployment compensation.
The taxpayer must provide more than half of the person’s total support for the year.
In cases where no one individual pays more than 50% of an individual’s support then Form 2120, Multiple Support Declaration, can be used in agreement between all support providers to decide which one will claim the exemption.
A person is not a qualifying relative of a taxpayer if that person meets the requirements for being a qualifying child of any other taxpayer. But if the other taxpayer is not required to file a return for the year or only files a return solely for a refund claim, then the child is not a qualifying child of the other taxpayer.
If you could be claimed as a dependent by another person, you cannot claim anyone else as a dependent. Even if you have a qualifying child or qualifying relative, you cannot claim that person as a dependent.
A taxpayer generally cannot claim a married person as a dependent if he or she files a joint return.
A taxpayer cannot claim a person as a dependent unless that person is a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico.
Example: Jane lives with her boyfriend throughout the 2013 year. She has income far less than $3,900 in 2013. Her boyfriend earns $25,000 and provides more than 1/2 of her support. Jane can be claimed as a qualifying relative by her boyfriend.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm’s full disclaimer.
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