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Claiming tax dependent deductions can greatly reduce your tax dues. Recognizing qualified dependents in your tax returns will entitle you to specified deductibles and, at the same time, may allow you to change your status from single to head of household. Note that tax exemptions for heads of households are considerably higher than for single taxpayers, so you can actually save a lot of money by recognizing tax dependents in your returns. However, you need to make sure that the persons you claim as dependents are qualified to be such under the IRS rules and regulations. To help you claim the correct deductions, identify your qualified dependents.
Qualified Children
Under IRS rules, children may qualify as dependents for taxation purposes if they are your sons, daughters, foster children, adopted children or stepchildren. Your nephews, nieces, grandchildren, brothers, sisters, stepsisters and stepbrothers may also qualify as dependents if they rely solely on you for support. Only children who are under 19 years old or students under 24 years old and those who are permanently disabled in certain ways qualify as dependents. Permanently disabled children can be considered dependents for the duration of their lives. If you have a disabled child who is over 24 but is not gainfully employed and able to support him- or herself independently, the law still considers him or her a dependent for taxation purposes.
Before parents and guardians can claim child tax deductions, they must meet the residency requirement set under the law. Based on the rules and regulations set by the IRS, a child must stay with his or her parents for at least half a year unless special circumstances prevent the child from living at home. The IRS rules define special circumstances as absence for education, treatment for medical problems or when the child lives with the other parent in case of a divorce. The absence of the child from the home must be temporary in nature in order to fall under the definition of special circumstances. In case the child lives with the other parent, the person seeking child tax deductions must show to the IRS that he or she is providing more than 50 percent of the cost of the child’s needs.
Qualified Relatives
Aside from children, you can also recognize qualified relatives as your dependents for taxation purposes. Qualified relatives may include your in-laws, nephews, nieces and grandchildren who are living with you or are dependent on you for support. Under the IRS rules and regulations, foster children and stepchildren may be considered qualified relatives.
To claim tax deductions on your qualified relatives, you need to show that these people have lived with you for a full year. Also, you need to show that your qualified relatives have a gross income of $3,500 or less in order for you to claim tax deductions. The IRS is very strict when it comes to income requirements. Even if the income of your relative exceeds the limit by only a dollar, you cannot claim tax deductions on that relative.
