Pop quiz: I am married and live with my wife and 2 children, ages 28 and 14, along with my elderly mother-in-law who has no income and my brother who has been unemployed for 2 years, draws $7,500/yr in unemployment yet never offers to pay for anything. How many dependents can I claim on my Form 1040 individual income tax return? The answer might surprise you. Determining the correct number of dependents to claim on a 1040 for most families is simple. For example, a married couple with two children under the age of 18 has two dependents (the two children). But, in family situations like the one laid out above, the number of dependents is not so obvious. Claiming the correct dependents is important to the taxpayer because it gives them the opportunity to take advantage of tax benefits tied to those dependents, such as personal exemptions, the child tax credit, the child and dependent care credit, education expense deductions and credits, and the earned income credit. Claiming the correct dependents is also important to the IRS, because they will match the social security numbers listed on the 1040 to their system to make sure the dependency claim is valid.
So who qualifies as a dependent? Let's start with children first.
Dependent children
To qualify as a dependent, the child must meet the following criteria:
- Must be your son, daughter, stepchild, foster child, brother (biological, half, or step), sister (biological, half, or step), or a descendant of any of these (grandchild, niece, etc.). Adopted children are always treated as your own children.
- Their age at the end of the tax year must be 1) under 19, 2) under 24 if a student, and 3) younger than you (and your spouse if filing a joint return). However if the child is permanently or totally disabled, their age does not matter.
- The child must have lived with you for half of the tax year
- The child must not have provided more than half of their own financial support
- The child is not filing a joint return for the tax year
If the child meets these criteria for the tax year, they are a dependent child. If the dependent child has to file their own tax return in the same year that they are claimed as a dependent, they cannot claim a personal exemption for themselves.
One note on this topic: mentioned above are brothers and sisters. In the event that the taxpayer has a much younger sibling, and the taxpayer provides the siblings care (in the event of the death, disability, or absence of the parents), then it is possible for a sibling to be a dependent child.
Dependent relative
In some cases, a relative can qualify as a dependent on someone else's tax return. To qualify as a dependent, the relative must meet the following criteria:
- The person cannot be a qualifying child or the qualifying child of another taxpayer (a child that meets the criteria in the section listed above)
- The person lived in the home for the entire year and is not a relative, or is a relative (brother, sister, father, mother, niece, nephew, uncle, aunt, or any of these as half, step, grand, or in-law)
- The person's gross income for the year must be less than $3,900 (because that is the amount of the personal exemption).
- The person does not provide more than half of their own support for the tax year.
Just like for children, if a dependent relative files their own tax return in the same year that they are claimed as a dependent, they cannot claim a personal exemption for themselves.
Now back to the example from the beginning. The correct number of dependents is two. Here's how:
The 14-year-old child is a dependent, but the 28-year-old is not, because they are over 24 and not a full-time student.
The mother-in-law is a dependent relative because she had no income and she did not provide over half of her own support.
The brother is not a dependent relative because the unemployment he draws makes his gross income above the threshold, even though he did not provide more than half of his own support.
In unique family situations, determining dependency exemptions can be complex. Taxpayers should consult the IRS website or their tax professional for additional guidance.