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Step 1
Determine if your relative meets certain qualifying tests defined by the IRS. Your relative may not be your qualifying child or the qualifying child of someone else. He must be a member of your household or, if he does not live with you, he must be related to you. Sisters, brothers, grandparents, in-laws and stepparents are examples of qualifying relatives. Your relative must be a U.S. citizen, a U.S. national, a Canadian or Mexican resident or a U.S. resident alien. Certain temporary absences for military service or schooling do not disqualify a relative as being your dependent.
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Step 2
Calculate your relative's income. To qualify as your dependent, a relative may have a gross income of no more than $3,500 per year. Gross income may include taxable earnings, income from rental property, profits from partnerships and unemployment benefits. The gross income regulation may be waived if your relative dependent is disabled during a given tax year.
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Step 3
Evaluate how much support you provide to your relative. Usually, you must supply at least 50 percent of your relative's support during a given tax year. If two or more individuals provided support for a relative, a multiple support agreement must be filed with the IRS, and only one person may take the dependency exemption for any one year.
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Step 4
Understand that you may not claim a relative dependent if you, yourself, are a dependent of someone else. If your relative dependent is married, she may not file a joint tax return with her spouse unless a joint return is filed only to receive a refund and neither spouse would owe income tax if they had filed separately.
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Step 5
File federal tax Form 1040 and provide the social security number (or individual taxpayer identification number) of each relative dependent on line 6c. As of 2008, you may deduct $3,500 from your income for each exemption you take. Enter the total amount of your deduction on line 42 of Form 1040.
