Tax Planning in the U.S.

Claiming Dependents
Rules for claiming children and relatives as dependents

By William Perez
Updated October 28, 2015

Being able to claim a dependent on a tax return is tied to a number of tax-related benefits.
Taxpayers can deduct an additional personal exemption for each dependent that they claim.
Taxpayers who claim a dependent may also be eligible for the child tax credit, the child and
dependent care tax credit, and the earned income tax credit. Taxpayers who are not married and
who support a dependent may be eligible for the head of household filing status.

With all these tax benefits tied to claiming a dependent, it is important to know whether or not
your dependent can be claimed on your tax return.

To be eligible to claim a dependent, a taxpayer would need to meet the following four general
criteria:

• The taxpayer is not a dependent of another person. Persons who are dependents are
treated as not being eligible to claim dependents.
• The taxpayer cannot claim a dependent who is married and files a joint return. However,
there's an exception. A married person can file a joint return and still be claimed as a
dependent if that joint return claims only a refund of tax withholding or estimated tax
payments and there would be no tax liability for either spouse had they filed separate
returns.
• The dependent in question is a citizen, national or resident alien of the United States, or a
resident of Canada or Mexico.
• The dependent in question meets the definition of being either a qualifying child or a
qualifying relative.

Dependents are categorized into two sub-types:

• qualifying child or
• qualifying relative.
These links will provide you with the necessary information to help you decide whether or not
your dependent can be claimed under either of the sub-types.

Every dependent who qualifies under either set of criteria can be claimed by one and only one
taxpayer for that year.

There are additional rules that help the IRS make sure that not more than one taxpayer claims the
same dependent.

First, the qualifying child criteria always take precedence over the qualifying relative criteria. So
if someone can claim a dependent as a qualifying child, then no one else can claim the same
dependent as a qualifying relative.

Secondly, within the qualifying child criteria, the child must have been residing with the
taxpayer for more than half the year. Within the qualifying relative criteria, the taxpayer must
provide more than half the cost of the relative's support and care.

The IRS audits tax returns where two or more taxpayers attempt to claim the same dependent,
and only one taxpayer will win. The taxpayer who loses might also lose the related tax breaks
such as the child tax credit, the earned income credit, or the Head of Household filing status.
What that means, is that the losing taxpayer will have to pay additional taxes, plus penalties and
interest. That makes dependent audits one of the most expensive audits that a taxpayer can
endure.

To protect yourself, you should make sure that you are eligible to claim each dependent shown
on your return. Parents who do not live with each other, whether or not married, should also
review the rules for sharing the tax benefits of a dependent. If you claim a dependent, you should
gather any documents that would support your claim, and keep these documents for future
reference. It would also be advisable to get a written agreement with the other parent detailing
who gets to claim the dependents and for which years.

Next pages:

• Qualifying Children
 • Qualifying Relatives
• Residency Requirements for Qualifying Relatives
• Relationship and Residence Requirements for Qualifying Relatives

These criteria define what qualifies a child as a dependent.

To be claimed as a qualifying child, the person must meet four criteria:

Relationship — the person must be your child, step child, adopted child, foster child, brother or
sister, or a descendant of one of these (for example, a grandchild or nephew).

Residence — for more than half the year, the person must live in your home.

Age — the person must be either

• under age 19 at the end of the year, or

• under age 24 and a full-time student for at least five months out of the year, or
• any age and totally and permanently disabled.

Support — the person did not provide more than half of his or her own support during the year.

Some Tips about Claiming Qualifying Children

The qualifying child must live with you for more than half the year. More than half a year
means, at minimum, six months and one day. If you share custody, you may want to keep a log
of where the child spends the night in your calendar.

The qualifying child must not provide more than half of his or her own support.This is
different from the tax laws that applied prior to 2005. Under the previous tax laws, the taxpayer
had to provide over half the support for the child. This change makes it easier for families relying
on public assistance, charity, and gifts from family members to claim a dependent.

If a person does not meet the criteria to be a qualifying child, he or she might meet the
criteria to be a qualifying relative. However, the qualifying child criteria trump the qualifying
relative criteria under the tie-breaker tests. So, the taxpayer will want to make sure no other
taxpayer could claim the dependent under the qualifying child criteria.

This should be checked before claiming a qualifying relative on a tax return to minimize hassles
when the IRS processes the tax return.

Tie-Breaker Tests for Claiming a Qualifying Child

If two or more taxpayers claim a dependent as a qualifying child in the same year, the IRS will
use the following tie-breaker tests to determine which taxpayer is eligible to claim the dependent.
The tie-breaker tests are listed in order of priority.

The taxpayer most eligible to claim the child as a dependent under the qualifying child criteria is:

1. the parent,
2. the parent with whom the child lived for the longest time during the year,
3. if the time was equal, the parent with the highest adjusted gross income,
4. if no taxpayer is the child's parent, the taxpayer with the highest adjusted gross income.

Some Additional Tips for Tie-Breaker Situations

A child can be the dependent of at most one taxpayer. If you qualify to claim the child, then
be ready to submit documentation to the IRS to support your claim.

Chances are the child will spend at least one day more with one parent than the other
parent, since there are usually 365 days in a year.

Consider keeping a log of where the child spends the night.

If the child spends exactly equal time with both parents, the parent with the higher income
will be able to claim the dependent. Both parties can prevent an IRS audit by reviewing these
tie-breaker rules in advance, and agreeing on who gets to claim the dependent.

The non-qualifying parent can claim the dependent only if the qualifying parent releases
his or her claim to the dependency exemption. You accomplish this by using IRS Form 8332,
Release of Claim to Exemption for Child of Divorced or Separated Parents (PDF document).
You can indicate on this form for which year or years you agree to release the exemption. You
can also revoke the release if you later change your mind.

Taxpayers may claim a qualifying relative as a dependent if that person meets the following
criteria.

Six Criteria for Qualifying Relatives

1. The dependent cannot be a qualifying child of another taxpayer.

2. The dependent earns less than the personal exemption amount during the year. For 2013,
this means the dependent earns less than $3,900.
3. The taxpayer provides more than half of the dependent's total support during the year.

1. The taxpayer is related to the dependent in certain ways.

2. If the dependent is married, the dependent cannot file a joint return with his or her
spouse.
3. The dependent must be a citizen or resident alien of the United States, Canada, or
Mexico.

TIPS

• These rules apply to any dependent who is not a qualifying child.

• They might apply to people such as cousins, parents, grandparents, and other people
supported by the taxpayer.

Qualifying Child Test

Generally, taxpayers will not be able to claim a dependent if that dependent qualifies to be
the qualifying child of another taxpayer. So you will want to check the qualifying child rules to
make sure no one else can claim the dependent.
The IRS has clarified this particular criteria. A dependent will not be considered a qualifying
child of another taxpayer if that dependent's "parent or (or other person with respect to whom the
individual is defined as a qualifying child) is not required ...

to file an income tax return and (i) does not file an income tax return, or (ii) files an income tax
return solely to obtain a refund of withheld income taxes." Source: Notice 2008-5 (pdf). While
this may make it easier for taxpayers to claim a qualifying relative, it will also be important to be
diligent in making sure that no one else can claim the dependent under the qualifying child
criteria.

Gross Income Test

The gross income test is tied to the personal exemption amount. For 2013, the personal
exemption amount is $3,900.

A taxpayer cannot claim a dependent as a qualifying relative if that person's gross income is
$3,900 or more (for 2013). "Gross income is all income in the form of money, property, and
services that is not exempt from tax" (from Publication 501).

Total Support Test

The taxpayer must provide over half of a person's total support during the year. "Total support
includes amounts spent to provide food, lodging, clothing, education, medical and dental care,
recreation, transportation, and similar necessities" (from Publication 501).

There is an exception to the Total Support Test. If multiple people support a single person, they
may file a Multiple Support Agreement with the IRS to allow one person to claim the
supported person as a dependent. For example, let's say three sons all equally support their
mother. Since no one provides over half the mother's support, they could file a Multiple
Support Agreement, IRS Form 2120 (PDF document) to allow one of the sons to claim the
mother as a dependent.

Relationship Test
The relationship test is critical to being able to claim a qualifying relative. Some types of
relationships have no residency requirements. For example, taxpayers can claim parents as
dependents under the qualifying relative criteria as long as they meet the other criteria, and the
parents don't have to reside in the same household as the taxpayers. Other types of relatives may
have to live with the taxpayer for an entire year before to be eligible as a dependent under the
qualifying relative criteria. Find a full list of Relationship and their Residence Requirements on
the next page.

Relationship Test for Qualifying Relatives

To meet the relationship test, the dependent must either

• be related to the taxpayer is one of the following ways, or

• live with the taxpayer for an entire year, and the relationship must not violate local laws.

Qualifying Relationships with no residency requirement

The dependent will meet the relationship test for being claimed as a qualifying relative if the
dependent is related to the taxpayer in one of the following ways:

• son or daughter, grandson or granddaughter, great grandson or great granddaughter,

stepson or stepdaughter, or adopted child,

• brother or sister,
• half-brother or half-sister,
• step-brother or step-sister,
• mother or father, grandparent, great-grandparent,
• stepmother or stepfather,
• nephew or niece,
• aunt or uncle,
• son-in-law, daughter-in-law, brother-in-law, sister-in-law, father-in-law, or mother-in-
law, or
• foster child who was placed in your custody by court order or by an authorized
government agency.
TIPS

• Qualifying relatives who are related in one of these ways need not live with the taxpayer.
As long as you meet the other four tests (gross income, support, citizenship, joint return),
you can claim these qualifying relatives as a dependent.
• Relationships established by marriage do not end with death or divorce. So if you support
your mother-in-law, you can claim her as a dependent even if you and your spouse are
divorced.
• You can claim a foster child starting with the year that the foster child was placed in your
custody.

Qualifying Relationships with a mandatory residency requirement

The dependent will meet the test to be claimed as a qualifying relative if:

• The person is a member of your household, and

• The person lives with you for an entire year, and

• The relationship between you and the dependent does not violate local law.

For example, you may be able to claim cousins, friends, boyfriend or girlfriend, or domestic
partner as a dependent under the qualifying relative tests. These qualifying relatives must live
with you for an entire year, and must meet all the other criteria for qualifying relatives (gross
income, support, citizenship, joint return).

The relationship, however, must not violate local law. For example, if your state prohibits co-
habitation with a married person, then you cannot claim that person as your dependent even if
you meet the other criteria for claiming a dependent.

TIPS

• Domestic partners may be claimed as a dependent under the qualifying relative tests.
• Cousins may be claimed as a dependent under the qualifying relative tests.