Is it possible to claim a dependent on your tax return? If this is the case, many federal tax advantages, such as the earned income tax credit (EITC) and child tax credit (CTC), may be able to reduce your tax burden or possibly raise your refund. Here’s a quick rundown of who qualifies as a dependent and how declaring one affects your tax return and tds rates.
What Exactly Is a Qualified Dependent?
A dependent is someone for whom you provide at least half of their annual financial support—for home expenditures, medical care, education, clothes, and so on.
2 If you have a dependent, you may be eligible for a number of tax breaks that could save you money at tax time.
Today’s Rate
Sat 16 Nov. 2024
What Are the Qualification Criteria for a Child?
A child cannot merely be a child in order to be considered an eligible child. To be your qualified kid, a person must meet five criteria, according to the IRS:
1] Relationship evaluation. To pass this test, the person must be your biological or adopted child or stepchild, foster child, sibling or step siblings, or a descendant of any of these.
2] Age assessment. The person must be (a) under the age of 19 at the conclusion of the tax year, (b) under the age of 24 if a full-time student and younger than you, or (c) any age if permanently and totally incapacitated.
3] Residency examination. The person must live in your principal residence for more than half of the tax year. Exceptions apply in cases such as temporary absences (for example, due to illness, education, or vacation) or the birth or death of a child within the year.
4] Run a support test. The individual must offer less than 50% of their own support for the entire year.
5] Make a joint return. The individual is not required to file a joint return for the year (unless they file only to claim a refund of income tax withheld or estimated tax paid).
What Are the Qualifications for a Qualifying Relative?
- Similarly, a qualified relative is more than just someone to whom you are related. To be a qualifying relative, the person must instead meet four criteria:
- There is no qualifying child test. This person cannot be your eligible child or the qualifying child of another taxpayer.
- Test for household members or relationships. As a household member, the person must live with you throughout the year. Otherwise, they must be related to you as your child, stepchild, foster child, or a descendant of any of them; your sibling, including half-siblings and stepsiblings; your parent, stepparent, grandparent, or another direct ancestor (but not a foster parent); or your daughter-in-law, son-in-law, mother-in-law, father-in-law, sister-in-law, or brother-in-law.
- The test of gross income. The person’s gross annual income must be less than $4,300 ($4,400 in 2022). If the person is incapacitated and receives money through a sheltered workshop, there is an exception.
- Test for support. You must contribute more than half of the person’s entire annual support.This was in brief about on tax reduction. To know more about presumptive income, click here.
