Deductible dependentsFrom the Tax Lounge Archives

From newborns to adult children who have moved back after college, to elderly parents and relatives who need constant care, dependents come in all sizes, shapes and ages. This can make figuring out income tax deductions difficult, especially for filers who are uncertain about the rules for claiming these individuals on their tax returns. 

The Internal Revenue Service has criteria that must be met for individuals to qualify as eligible dependents for tax purposes. Generally, qualifying children are defined as a biological child, step-child, adopted child, foster child, brother or sister or a descendant of one of these. To claim them on your tax return, these individuals must live in the filer's home for more than half the year. In addition, qualifying children must not have provided more than half of their own support for the year. Lastly, in order to claim children, they must be under age 19 at the end of the year, or under age 24 and a full-time student for at least five months of the year. Additionally, parents can claim qualifying children of any age if they are totally and permanently disabled.

Relatives can be claimed as well
In addition to children, taxpayers who support relatives may able to claim them as dependents if they meet certain guidelines. First, the dependent cannot be a qualifying child of another taxpayer. In addition, the dependent must earn less than the personal exemption amount for the year, which for 2014 is $3,950. The taxpayer must also provide more than half of the individual’s total support during the year. An important rule to remember when filing taxes is that those who plan to claim an adult relative cannot do so if that dependent is married and plans to file a joint return with a spouse. Lastly, the person being claimed must be a citizen or resident alien of the United States, Canada or Mexico.

In scenarios where several people are helping to care for an adult relative, the tax rules can be confusing. It’s important for individuals to keep active records of how many days the person lives with them, how much financial and medical support is provided, and how much income the individual receiving care brings in. It may also be a good idea to consult a tax preparer

Updated for 2014 Tax Year

Disclaimer: Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.