Basic Rules Regarding Claiming Dependents for 2010 Returns

Question:

What are the basic rules regarding who I can and can’t claim as a dependent on my 2010 tax return?

Answer:

In general, dependents are people that you provide financial support to. However, for tax purposes, there are specific requirements that have to be met in order to claim somebody as your dependent. Dependents are important for tax purposes because, for each dependent you can claim, you are allowed a $3,650 per person deduction on your income tax return, which reduces your taxable income and therefore, your tax liability.

An important thing to keep in mind is that each and every person in the United States that CAN be somebody’s dependent for tax purposes can only be claimed ONCE. So, if somebody claims you as a dependent, you are not allowed to claim an exemption for yourself. Also, a married person cannot generally be claimed as a dependent by anybody else (although there are a few exceptions). Also, your spouse is never a dependent, but you are allowed an exemption for them if filing a joint return.

So what is a dependent? A dependent is a qualifying child or qualifying relative that you provide support for. A qualifying child must be related to you by one of the following means:

–Your son, daughter, stepchild, foster child, or a descendant (for example, your grandchild) of any of them, or
–Your brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant (for example, your niece or nephew) of any of them.

Also, the child must be a U.S. citizen or permanent alien, have lived with you for more than half the year, and you must have provided at least half the financial support for the child.

There is also an age test that applies to claiming a child as a dependent. The child must be under 19 and younger than you or your spouse if you file jointly. If the child is a full time college student, the age cap changes, and then the child must be under 24 at the end of the tax year. The only exception to this age rule is if the child is totally and permanently disabled, in which case there is no age restriction.

These are the general rules for claiming a child as a dependent. The rules for another type of relative are quite similar. This relative can be almost any blood relative or step-relative (yep, your mother in law counts!).

Things tend to get a little trickier when there are divorce decrees and joint custody arrangements in place, and there are a slew of “tiebreaker” rules that come into effect to determine who gets to claim a dependent if there is any dispute over whom should claim the dependent. In these cases, talk to your tax professional to make that more in-depth determination.