What is the approved?

The dependent is a person to whom you have provided substantial financial support during the tax year. The IRS recognizes two types of dependents: qualifying children and qualifying relatives.

How does a dependent work?

There are several other criteria that must also be met, depending on their age and relationship to you. Being able to claim them on your tax return can literally save you thousands of dollars.

Qualifying children

A qualifying child must meet the following criteria:

The person you claim must be your child, stepchild, adopted child, sibling, half-sibling, stepsibling, or a descendant of any of these individuals.
Your child must be younger than you; under age 19 at the end of the tax year; under age 24 at the end of the tax year if they are a full-time student for at least five months; or totally and permanently disabled.
Your child must have lived with you for more than half the year, with some exceptions, such as military deployments and living away for education purposes. Your child must intend to return to your home after any absence.
Your child must not have provided more than half of their own financial support during the year.
You must be the only person claiming them as a dependent.

Note: Special rules apply to children living with divorced or separated parents. The parent who lived with the child more during the year has the first right to claim the child. The parent with the higher adjusted gross income can claim the child if the child lived with both parents equally.

Qualifying relatives

Qualifying relatives must also meet certain rules:

The dependent must have lived with you for the entire year if they are not related to you by blood, such as your parents or grandparent. The IRS offers a complete list of relatives who do not need to live with you. They cannot be your qualifying child or a qualifying child of another taxpayer. They must not have received $4,300 or more for the full tax year of 2021. This limit may be adjusted annually for inflation.
You must provide more than half of their total financial support for the year.

Note: You must be the only person entitled to claim qualifying relatives as dependents, or you can file Form 2120 “Multiple Support Agreement” with the IRS. Other relatives can waive their right to claim the dependent by signing statements to that effect. You must have paid over 10% of your qualifying relatives’ total support needs in this case. This option applies to siblings who jointly support elderly parents.

Three additional rules

Three additional tests must be met before you can claim either type of dependent:

Dependency test: You cannot claim dependents if they could be claimed as a dependent by someone else.
Joint return test: You cannot claim a married person as a dependent if they filed a joint tax return unless the return was filed only to claim a refund of tax.
Citizen or resident test: The person you claim must be a U.S. citizen or resident alien living in the U.S. or a U.S. citizen or resident of Mexico or Canada (with some exceptions for adopted children).

Benefits of dependents

The idea of claiming dependents was established in 1954 with Section 151 of the Internal Revenue Code and the introduction of personal exemptions. You can claim a personal exemption for each dependent you are entitled to claim. These exemptions reduce the amount of income that is taxable.

Personal exemptions were eliminated under the Tax Cuts and Jobs Act (TCJA), at least from 2018 to 2025 while the TCJA remains in effect. The standard deductions have effectively been increased under the law. Some tax credits for dependents have been increased and a new tax credit has been created. These credits include the Child Tax Credit, credit for other dependents, child and dependent care credit, and others.

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You may also qualify for the head of household filing status if you have a dependent, although there are many other qualifying rules. You must pay more than half the costs of maintaining your home, and you can not be married unless you lived apart from your spouse for the entire year.

Note: The eligibility requirements for dependents may vary slightly in their specific details for each of these dependents. The IRS has a tool that can help you determine if your child qualifies for the Child Tax Credit or if another adult qualifies as a dependent.

Should You Claim Dependents?

It is not mandatory to claim dependents on your tax return, but it is generally a good idea, as claiming them may qualify you for thousands of dollars in tax credits, among other benefits. If you choose not to add them to your tax return, you’re leaving money on the table each year.

However, there are several credits that phase out at higher income levels. For example, for the year 2021, the Child Tax Credit begins to phase out when income exceeds $150,000 for married filing jointly, or $112,500 for head of household, or $75,000 for single filers or married filing separately.

Advantages and Disadvantages of Dependents

Advantages

Adding a dependent can reduce your overall tax burden.
Some credits are refundable, so you can get cash after they offset what you owe the IRS.

Disadvantages

Claiming someone as a dependent prevents them from filing their own tax return.
You may not see much of a benefit if your income is very high.

Frequently Asked Questions (FAQs)

Can I claim myself as a dependent?

No. A dependent is someone other than yourself or your spouse who relies on your support for the entire year. Dependency exceptions are only granted when you claim a qualifying child or qualifying relative. Additionally, you cannot claim a dependent if you are claimed as one yourself.

Who qualifies as a dependent?

In order to claim a dependent, you must have provided them with more than half of their support for the entire year. The IRS provides a worksheet to determine support to help you calculate whether you meet their requirements.

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Sources:

IRS. “Publication 501 Dependents, Standard Deduction, and Filing Information.” Pages 11 and 16.
Intuit TurboTax. “Rules for Claiming a Dependent on Your Tax Return.”
IRS. “About Form 2120, Multiple Support Declaration.”
House of Representatives Committee on Ways and Means. “Internal Revenue Code of 1954.”
IRS. “Principles of Tax Reform for Individuals and Families,” pages 7-8.
IRS. “Who Is a Qualifying Person for Head of Household Filing Status?”
IRS. “2021 Child Tax Credit and Advance Child Tax Credit Payments – Topic C: Calculating the Child Tax Credit for 2021.”

Source: https://www.thebalancemoney.com/what-is-a-dependent-5095251