Dependents Tax Course Flashcards

Study Notes

Dependents Overview

A dependent is a qualifying child or qualifying relative, critical for claiming a dependency exemption.
For 2016, each dependency exemption reduces taxable income by $4,050.
A person cannot be claimed as a dependent on multiple tax returns.

Rules for Claiming Dependents

A taxpayer cannot claim a dependent if they (or their spouse, if filing jointly) can be claimed by another taxpayer.
Married individuals filing jointly can only be claimed as dependents if their return is solely for a refund and they owe no tax.
Dependents must be U.S. citizens, resident aliens, U.S. nationals, or residents of Canada/Mexico.
Dependents must meet criteria as either a qualifying child or qualifying relative.

Qualifying Child

A qualifying child must pass tests related to relationship, age, residency, support, and joint return status to qualify for dependency exemption.

Qualifying Child: Relationship Test

The relationship test requires the child to be the taxpayer's son, daughter, stepchild, or a descendant, or a sibling or descendant thereof.

Qualifying Child: Age Test

To meet the age test, the child must be permanently disabled, under 24 and a full-time student, or under 19 years of age.
Children born and dying in the same year are considered qualifying, but stillborn children do not qualify.

Qualifying Child: Support Test

A qualifying child must not provide more than half of their own support, which includes household expenses and specific personal expenses.
Calculation involves assessing funds at the beginning and end of the year and all money received in between.

Qualifying Child: Residency Test

The residency requirement mandates that the child must live with the taxpayer for more than half the year, unless exceptions apply (e.g. illness, education, absences).
A child born and dying within the same year qualifies, while stillborn children do not meet this requirement.

Qualifying Child: Joint Return Test

A taxpayer cannot claim a married child as a dependent unless they file jointly for a refund without claiming their personal exemption or meet certain conditions when filing separately.

Qualifying Relative

A qualifying relative must meet the criteria of not being a qualifying child, having a relationship or residing in the taxpayer's household, meeting gross income limits, and support test conditions.

Qualifying Relative: Member of Household

To qualify, a relative can either be a member of the taxpayer's household or have a specified relationship to the taxpayer.

Description

Test your understanding of dependents in tax scenarios with these flashcards. Each card helps clarify who qualifies as a dependent, and the tax implications related to dependency exemptions. Perfect for students studying tax law and financial principles.