Do you provide the home and care for another adult? If so, you may be able to get additional tax benefits when you file your income tax forms. How? By claiming the person or persons as dependents through either the qualifying child designation or the qualifying relative category. What do these mean? And how can you ensure you claim dependents correctly? Here's what you should know about both types of dependents.
What Is a Qualifying Child?
The most common way to claim a dependent is as a qualifying child. This includes most minors who are related in some way (including through marriage) to the taxpayers and for whom the taxpayer provides more than half the cost of living. However, once your child turns 19, you may still be able to claim them even though they are a legal adult. This exception extends to the age of 24 if they are classified as a full-time student.
The rules for qualifying children can be complicated if their parents are divorced or if they live with more than one family relation equally through the year. In this case, the IRS has arranged for tie-breaker rules which dive more deeply into determining which taxpayer may claim the child or young adult.
What Is a Qualifying Relative?
The category of qualifying relative is designed to capture dependents that may not fit the more traditional rules of a qualifying child. It's important to note that the person you claim doesn't need to actually be a relative in order to qualify. If they are not related by blood or marriage, they simply must live with the taxpayer for the entire year.
Who might qualify as your qualifying relative, then? It can include a parent or grandparent who lives elsewhere but for whom you provide the majority of support, an uncle or aunt, a niece or nephew, in-law relations, adult children living at home, and adult siblings you care for. Unrelated qualifying relatives often include a live-in partner, unemployed roommates, or children of these.
Unlike qualifying children, who can generally earn their own income and still be claimed as a dependent, qualifying relatives have an income limitation. The relative must also be of certain residential or citizenship statuses.
Where Can You Learn More?
Understanding who you may be able to claim on your taxes is vital to ensure you don't pay any more taxes than you must. But the rules can also be complex, and you may also have to abide by state tax rules. Start navigating this tricky subject by meeting with a tax preparation service in your state today.