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Understanding Tax Dependents

Claiming a dependent on your taxes can save you money, but it’s important to know who qualifies as a dependent according to the IRS. This guide will help you understand the criteria for tax dependents and the potential tax credits you can claim.

What Is a Tax Dependent?

A tax dependent is someone who relies on you for support. Claiming a tax dependent can qualify you for head of household tax filing status or tax credits like the child tax credit or the child and dependent care credit. The IRS has specific criteria for who can be considered a dependent:

• Your dependent can’t be claimed by another taxpayer.
• A dependent can’t be married filing a joint return unless it’s solely for claiming a tax refund.
• Your dependent must be a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico.
• A tax dependent must be your qualifying child or qualifying relative.

Who Is a Qualifying Child for a Tax Dependent?

The IRS recognizes various relatives as dependents, provided they meet certain criteria. These include:

• Son or daughter
• Stepchild
• Foster child
• Brother or sister
• Half brother or half sister
• Stepbrother or stepsister
• Descendants of any of the above (e.g., grandchildren, nieces, and nephews)

Additionally, the child must be younger than you and your spouse (if filing jointly), under age 19 at the end of the year, or under 24 if they are a full-time student. They must have lived with you for more than half the year and not provided more than half of their own support during the year.

Who Is a Qualifying Relative for a Tax Dependent?

A qualifying relative can be someone who lives with you full-time and depends on you for support. They must meet the following guidelines:

• They are not your qualifying child or the qualifying child of another taxpayer.
• They are related to you or live with you as a member of your household.
• They don’t have a gross income of $4,300 or more.
• They receive more than half of their support from you.

Based on these qualifications, even a roommate could be considered a qualifying relative for tax purposes.

How Much Are Tax Credits for Dependents?

Claiming dependents on your federal tax return can significantly impact your tax bill. Here are some of the tax credits available:

Child Tax Credit

The child tax credit provides up to $2,000 for each qualifying dependent child under 17. This credit can lower your tax bill dollar for dollar.

Additional Child Tax Credit

If your child tax credit exceeds your total tax bill, you may receive up to $1,600 as a refund through the additional child tax credit.

Child and Dependent Care Credit

This credit covers 20% to 35% of up to $3,000 in qualified work-related care expenses ($6,000 for two or more dependents).

Credit for Other Dependents

If your dependents don’t qualify for the child tax credit, they may be eligible for a tax credit of up to $500.

Earned Income Tax Credit

Low- to moderate-income taxpayers may receive a larger credit if they have one or more dependents, with amounts varying based on income and number of dependents.

The Bottom Line

If you support your children, grandchildren, family members, or others in your household, you may be able to claim them as dependents and save on your taxes. Ensure you meet all IRS requirements before filing. For any mortgage service needs, contact O1ne Mortgage at 213-732-3074. We’re here to help you navigate your financial journey.

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