What Is the Tax Law for Claiming Someone As a Dependent?
Knowing who in your household qualifies as a dependent according to the Internal Revenue Code (IRC) saves you money on taxes and helps you avoid costly tax mistakes. You have the option to list all qualified dependents on your federal tax return in order to receive specific tax benefits.
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Function
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Claiming someone you cared for as a dependent on your federal tax return entitles you to specific deductions and exemptions under the IRC, the code of law governing the IRS. The Head of Household filing status, which allows you to deduct a greater amount from your taxable income, is only available to taxpayers with dependents, according to the IRS.
Identification
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As per the IRS, dependents must meet at least a relationship, residency and support test in order to be legally claimed. A child dependent must be under the age of 19 or 24 if a full-time student and related to you by blood, adoption or marriage, such as a child you had or a step-sibling. The child must live in your residence for at least six months out of the year and you must have provided at least half of the child's support.
A relative can be claimed as a dependent if the relative is related to you by blood or adoption, lives with you, receives half of his support from you and receives income under the limits set by the IRS. Some relatives do not have to live with you all year in order to qualify as a dependent, like your parents and siblings.
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Benefits
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The Child Care Credit is only available to taxpayers with dependents and allows you to claim child-care expenses and receive some money back if you meet the additional criteria set by the IRS. The Earned Income Credit, which is a tax benefit for low-income families, is only available to you if you have at least one dependent, according to the IRS.
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References
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