In almost every tax scenario, an extra dependent means less taxes. You can claim an additional personal exemption for every dependent on your tax return. For the 2014 tax year, the personal exemption for a dependent is $3,950. Dependent care spending accounts, which house some of your income tax-free, may be available through your work if you have a dependent. You also may be able to claim the Child and Dependent Care Credit to cover childcare costs and the Earned Income Tax Credit based on your income level.
The question of who gets to claim the child on a tax return is an important one for unmarried parents. Only one can claim the child, and a dependent comes with a myriad of financial tax benefits. For divorced parents, the parent with custodial rights generally gets to claim the child. For unmarried couples living together, the parent with the higher adjusted gross income should claim the child.
The Internal Revenue Service provides taxpayers with guidelines regarding who can claim a dependent. To claim a child as a dependent, the child must be under 19 years old or a full-time college student under 24 years old. The child must have been financially supported by the parent and lived with her for at least six months of the year. If your child didn't live with you for six months because he was at school, it's considered a "temporary absence" and you can still claim him.
For divorced parents, the residency test generally means whichever parent the child lived with more -- the parent with custodial rights -- gets to claim the child as a dependent. However, many couples negotiate this issue in a divorce agreement. Often, one parent will waive the right to claim the child as a dependent or the parents will trade off taking the deduction. If a waiver or declaration of this nature exists, the non-custodial parent can claim the child as a dependent.
If you and your partner are unmarried and living with your child, you probably both lived with your child for an equal amount of time. In this situation, the IRS directs the parent with the higher adjusted gross income to claim the child as a dependent. This rule generally works in the couples favor, because the parent with higher income often receives a bigger tax savings by claiming the child.
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