Dependents for Tax Purposes

There are several tax credits and tax exemptions that a person with dependents becomes applicable for and it is certainly a carrot one cannot say no to! For example, a person claiming dependents for tax purposes, apart from availing a personal exemption for the dependents, is also eligible for child tax credit, the child and dependent care tax credit, and the earned income tax credit.

Who Qualifies as a Dependent for Tax Purposes

The IRS rules lay down that the dependents can fall in either of the two classifications.

• Qualifying Child
• Qualifying Relative

So, if you ask the IRS, their straitlaced reply to any questions about dependents for tax purposes will be that you need to fall into either category if you are to qualify as a dependent. Let us now see what it takes to qualify as a dependent and therefore the dependent tax exemptions, under the rules.

Qualifying Child
The IRS have no problems if the child you claim as your dependent is your biological child, adopted child or foster child. You can even qualify as a child if your relationship is that of a brother, sister, half-brother, half-sister, step-brother, step-sister, or even a grandchild or any other descendant. You can qualify for any of these as a child if they meet the criteria given below.

Age
One can see three circumstances here.

• If the person qualifying as a child is under 19 years of age OR
• The person qualifying as a child is under 24 years of age but is a full-time student OR
• The person qualifying as a child is of any age, but permanently and totally disabled.

Residency
The person qualifying as a child under any of the three circumstances has been residing with you for more than 6 months in the past year.

Support
In addition to the other rules, the person qualifying as a child ought to additionally not provide for more than half of his or her total support.

Qualifying Relative
The other type of person you can list as a dependent on tax return is the qualifying relative. In case your dependent has not been able to qualify as a child for any reason, then you might want to try qualifying this person as a relative. Here are the requirements.

Relationship
In addition to the requirements given for the person to be a qualifying child, you may qualify as a relative under these relationships.

• Mother or father
• Grandparents and great-grandparents
• Stepmother or stepfather
• Nephew or niece
• Aunt or uncle
• Son-in-law, daughter-in-law, brother-in-law, sister-in-law, mother-in-law, father-in-law
• Foster child placed in your custody by court order or by an authorized government agency.

In addition to the above, the qualifying relative is not supposed to be a qualifying child for another person, otherwise, you cannot claim him or her as dependents.

Gross Income
The definition of a qualifying relative entails that the relative earn less than the annual personal exemption amount as set by the IRS for the year. The amount for 2009 and 2010 is set at $3650.

Support
Another important criterion to pass a relative as one of the dependents is that you pay more than half of their support during the year.

Citizenship
The dependents need to have citizenship of the United States or are residents alien of the United States, Canada or Mexico.

As with any legal issues, you need to prove your eligibility to fall under any section and you need legitimate documents to do that. In case you've divorced your spouse, you can get a written agreement in order to prove your eligibility.