Who Qualifies as a Dependent for Tax Purposes?

The more dependents you have, the less income tax you'll have to pay. Before 2018, you got a tax exemption of over $4,000 for each dependent. The Tax Cuts and Jobs Act, the massive tax reform law that took effect in 2018, eliminated the dependency exemption for 2018 through 2025.

However, having dependents can still save you substantial income taxes. Taxpayers with dependents qualify for valuable tax credits. Unlike the dependency exemption, which only reduces your taxable income, a tax credit reduces the amount of tax you must pay—for example, if you qualify for a $2,000 credit, you'll pay $2,000 less tax.

Also, if you're unmarried, you could also qualify for head of household filing status if you have dependents. This status entitles you to an increased standard deduction, which will save you taxes.

But who is considered a dependent for tax purposes? You could have a dependent for tax purposes and not even be aware of it—for example, if you support your elderly parents, other relatives, or even people not related to you who live in your household. If you provide more than half the support for anyone and you haven't claimed the person as a dependent in the past, make sure you read and understand these rules.

Children You Support Who Live With You Qualify as Dependents

You may claim as a dependent each child who's what the IRS calls a "qualifying child." A qualifying child is:

• related to you—your son, daughter, stepchild, adopted child, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of them (for example, your grandchild, niece, or nephew).
• under age 19 (or a student under 24)—the child must be under age 19 at the end of the tax year, or under age 24 if a full-time student for at least five months of the year, or any age if permanently and totally disabled at any time during the year.
• not self-supporting—didn't pay for over half of their own support during the year.
• lives with you—either for more than half of the year or falls within special rules for children of parents who are divorced, separated, or living apart (temporary absences for things like schooling, medical treatment, vacations, business, or military service don't count.)
• U.S. citizen or resident—a U.S. citizen, U.S. national, or resident of the United States, Canada, or Mexico for some part of the year.

Most qualifying children are the biological, adopted, or stepchildren of the taxpayers who claim them as dependents, but this doesn't have to be the case. For example, a brother, sister, or grandchild can be your qualifying child if that person is under 19, lives with you over half the year, provides less than half of that person's own support, and is a U.S. citizen or resident. Moreover, a qualifying child can be as old as 23 if that child is enrolled in school full-time.

How to Claim a Child as a Dependent

To claim a child as a dependent, you must list the child's Social Security number on your tax return. This rule is intended to prevent people from claiming tax credits and other benefits for children who don't really exist.

You may obtain a Social Security number for your child by filling out and filing Social Security Form SS-5. See the Social Security Administration website at www.ssa.gov for details. It takes about two weeks to get a Social Security number. If you don't have a required Social Security number by the filing due date, you can file IRS Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.

If you or your spouse is expecting a child, apply for a Social Security number at the hospital when you apply for your baby's birth certificate. The state agency that issues birth certificates will share your child's information with the Social Security Administration and it will mail the Social Security card to you.

Relatives You Support Qualify as Dependents

Most dependents are taxpayers' children. But they don't always have to be. If you contribute toward the support of a parent or other relative (or even a nonrelative in some cases), you could be entitled to claim the person as a dependent.

If you're a single taxpayer, this can qualify you for head of household filing status, which will give you a much larger standard deduction. In addition, you might be able to claim a $500 family care credit for the person. To be your qualifying relative, a person must pass the following three tests.

1. Member of Household or Relationship Test

First of all, the person must either be related to you or live with you as a member of your household. "Related" means the person is either:

• your child, stepchild, eligible foster child, or a descendant of any of them (for example, your grandchild) (a legally adopted child is considered your child)
• your brother, sister, half-brother, half-sister, stepbrother, or stepsister
• your father, mother, grandparent, or another direct ancestor, but not a foster parent
• your stepfather or stepmother
• a son or daughter of your brother or sister
• a brother or sister of your father or mother, or
• your son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law.

If any of these relationships were established by marriage, they don't count if the marriage was later ended by death or divorce.

A person not meeting any of these relationship tests can still be your dependent if that person (1) has the same principal place of abode as you, and (2) is a member of your household for the entire year.

2. Gross Income Test

The person's taxable income must be very low—no more than $4,400 in 2022. Such income includes taxable Social Security benefits and unemployment compensation but doesn't include disability benefits.

3. Support Test

You must pay for over half the person's support during the year (unless there is a multiple support agreement).

Both Children and Adults Can Qualify as Dependents

Any person you support who lives with you over half the time can qualify as your dependent for tax purposes. This includes not only your children but other relatives as well. Even friends, distant relatives, and domestic partners can qualify as dependents if they're members of your household.

The more dependents you have, the more tax you can save because you can qualify for valuable tax credits.

What Tax Credits Are Available to Taxpayers With Dependents?

Tax credits available for taxpayers with dependents include the following:

• child tax credit
• child and dependent care tax credit for child care expenses
• earned income tax credit
• American opportunity credit for higher education expenses, and
• lifetime learning credit for higher education expenses.

The child tax credit and earned income tax credit are wholly or partly refundable—that is, you can get all or part of the credit from the IRS even if you owe no taxes.

Talk to a Tax Lawyer

If you have questions about claiming dependents or what tax credits are available to you, talk to a tax lawyer.