Tax Topics

Jackson Hewitt® is here to help you understand complex tax laws so you can be better informed and take full advantage of tax law provisions.

These topics explore some of the more important aspects of complicated tax laws, in a manner that is understandable and concise.


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Dependents

Claiming someone as your dependent may significantly reduce the tax liability on your federal tax return. You may be entitled to a $3,900 exemption per dependent and a Child Tax Credit of up to $1,000 per qualifying child under age 17. Claiming someone as a dependent may also affect your filing status. You may qualify for the Head of Household filing status or the Qualifying Widow(er) filing status if you have a dependent. Additionally, if you pay educational expenses for this person, claiming the person as a dependent may allow you take advantage of education credits, the tuition and fees deduction, or the student loan interest deduction. A dependent does not have to be your child. Dependents can include others who are either related to you, such as a parent, or who have lived with you during the entire year as a member of your household.

To claim a dependent you must not be able to be claimed as a dependent by any other taxpayer. In addition, you generally cannot claim an exemption on a dependent who is married if they file a joint return. You cannot claim a person as a dependent unless that person is a U.S. citizen, a U.S. resident, U.S. national, or a resident of Canada or Mexico for some part of the year. To be a dependent, the person must be your qualifying child or qualifying relative.

Qualifying Child

A child is your qualifying child for dependency if all six of the following tests are met:

  • Relationship Test - Your qualifying child must be your:
    • Child (son, daughter, stepchild, adopted child, or eligible foster child) or descendant (for example, grandchild or great grandchild)
    • Sibling, half sibling, step-sibling, or descendant (for example, nephew or niece)
     
  • Age Test - Your qualifying child must be younger than you and under age 19, a full-time student under age 24, or any age if permanently and totally disabled.
  • Residency Test - Your qualifying child must have the same main home as you for more than half the year. Special rules may apply for kidnapped children and for temporary absences due to special circumstances such as illness, education, business, vacation, and military service.
  • Support Test - Your qualifying child must not provide more than half of their own support. For full-time students, amounts received for scholarships at an educational organization are not considered amounts paid for support.

If a child is the qualifying child for you and another person, you will need to decide who will claim that child as a dependent. If both of you claim the same child, the IRS will use the following tie-breaker rule to determine who can claim the child:

  • If only one of you is the child's parent, the parent can claim the child.
  • If both of you are the child's parents and you do not file a joint return together:
    • The parent with whom the child lived the longest period of time during the year can claim the child.
    • If the child lived with both parents the same amount of time, the parent with the highest adjusted gross income can claim the child.
    • If a child can be claimed as a qualifying child by their parents, but no parent claims them, then they cannot be claimed by another individual unless the other individual's adjusted gross income is higher than that of any parent of the child.
     

If a person does not meet the tests for being a qualifying child, they may qualify as your dependent under the qualifying relative tests.

Qualifying Relative

Qualifying relatives can include children who do not meet the qualifying child Age Test, other relatives (for example, parents, grandparents, uncles, aunts, and in-laws), and unrelated members of the household. Dependents under the qualifying relative status do not qualify the taxpayer for the EIC or child tax credits.

A person is your qualifying relative if all of the following tests are met:

  • Not a Qualifying Child Test - Your qualifying relative must not be a qualifying child for any taxpayer.
  • Note: An exception to this rule is when the other taxpayer for whom the child is a qualifying child is not required to, and does not, file a tax return. For example, Amanda and her son, Travis, live with Jeremy all year. Amanda worked during the holiday and earned $3,800. Amanda does not file a tax return because she is not required to so Jeremy can claim Travis as a qualifying relative. Jeremy is unable to claim the Child Tax Credit, Additional Child Tax Credit, or the Earned Income Credit for Travis.
  • Member of Household or Relationship Test - Your qualifying relative must either live with you for the entire year as a member of your household (but the relationship cannot violate local law) or be related to you in one of the following ways:
    • Child (son, daughter, or adopted child), or descendant (for example, grandchild or great grandchild)
    • Stepchild
    • Sibling, half sibling, or step-sibling
    • Parent or direct ancestor (for example, grandparent or great grandparent)
    • Stepfather or stepmother
    • Uncle or aunt
    • Nephew or niece
    • Father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law. 
Special rules may apply for kidnapped children and for temporary absences due to special circumstances such as illness, education, business, vacation, and military service.
     
  • Gross Income Test - Your qualifying relative cannot have a gross income in excess of the dependent exemption amount for the year.
  • Support Test - Generally, you must provide more than half of your qualifying relative's total support. Special rules may apply when more than one person is providing support for an individual or for children of divorced or separated parents.

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