Dependents Tax Course Flashcards

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.