IRS Rules and Exceptions for Claiming Tax Dependents - SmartAsset

The IRS knows that some taxpayers provide their children and relatives with financial support. That’s why the government offers folks with dependents the opportunity to reduce their tax burden. Being able to claim someone as a dependent may significantly lower your tax bill. If you’re struggling to determine your eligibility, a financial advisor who specializes in taxes can help.

What Is a Tax Dependent?

A tax dependent is a child, spouse, family member or even an unrelated friend who needs your financial support and lives with you. Dependents can be claimed by a taxpayer as an exemption to reduce the amount of taxes that will have to be paid. The IRS calls this a dependency exemption, and each one will decrease the amount of income that you will owe taxes on.

Let’s take a look at some of the IRS rules that determine who can qualify as a dependent.

Who Is Considered a Tax Dependent?

The IRS uses marital status, other types of relationships and how much support is provided in a tax year, among other factors, to determine whether a taxpayer can claim a dependent. For you to claim someone as a dependent, you need to have provided more than half of the person’s financial support for the year. It’s important to note, however, that not everyone you support qualifies as a dependent.

Here are two general rules for all dependents:

Claiming a Dependent: You can claim a child or relative as a dependent as long as no one else can claim that person as a dependent. Generally, you cannot claim someone as a dependent if he or she is married and filing a joint tax return. But there are a couple of exceptions to that rule. You may be able to claim a joint filer as a dependent if he or she only filed jointly to get a refund of estimated taxes that were paid or taxes that were withheld.
Citizenship: Dependents must be U.S. citizens, resident aliens, U.S. nationals, or a resident of Mexico or Canada.

How Much Does a Dependent Reduce Your Taxes?

When you claim a dependent on your tax return, you could be rewarded with several tax credits or tax deductions. A tax credit reduces the amount of tax you owe on a dollar-for-dollar basis and some tax credits are refundable. A tax deduction lowers your taxable income so that you owe less tax for the year. Tax credits are typically deemed to be more favorable to most people. Here is a breakdown of all the credits and deductions a dependent might help with:

Child Tax Credit: Each qualifying child that you claim as a dependent can help you qualify for up to $2,000 in tax credits.
Child and Dependent Tax Credit: If you pay for care for a dependent while you work then those expenses can qualify you for a credit worth up to $3,000 for one dependent and $6,000 for two or more.
Earned Income Tax Credit: In 2024, individuals who make up to $59,899 or married couples who file jointly and earn up to $66,819 can qualify for an earned income tax credit that is refundable.
American Opportunity Tax Credit: If you’re helping to pay college expenses for a dependent then you could offset some of that with this credit.
Student Loan Interest Deduction: If you are paying interest on a student loan that was taken out for a dependent then you could qualify for a deduction up to $2,500 for both tax years 2024 and 2023.
Medical and Dental Expenses Deduction: When you pay for medical or dental expenses for your dependents, you could qualify to deduct those expenses if they exceed 7.5% of your income.

As you can see, there are a lot of opportunities to benefit from your taxes by claiming dependents. It’s just a matter of determining what you’re eligible for and making sure you claim those benefits correctly.

What It Means to Have a Qualifying Child

Children are the most common dependent that people claim on their taxes because as a parent or guardian, you’re financially responsible for them in every aspect of their lives. There are some rules that are applicable if you have a unique situation that you should be aware of. The IRS says you can claim children as dependents as long as they meet the following requirements:

The child must be related to you. For example, your son or daughter, stepson or stepdaughter, brother or sister, stepbrother or stepsister, nephew or niece, or grandchild can be considered a dependent.
In most cases, the child you’re trying to claim must live with you for more than six months out of the year. But there are exceptions for children who are away from home because they’re sick, attending college, serving in the military, starting a business or taking a vacation.
The child you’re trying to claim has to meet an age test. Children can only be claimed as dependents if they are under the age of 19. However, you can claim full-time students as dependents until they turn 24.

Additionally, children who are permanently or completely disabled can be claimed as dependents for their entire lives if they meet the other criteria for qualifying children.

What It Means to Have a Qualifying Relative

A qualifying relative is a member of your family or a friend who is designated by the IRS as a tax dependent. This means that a taxpayer must provide financial support for that relative or friend for most of the year.

Here are some general rules and exceptions for qualifying relatives:

If you have a relative who relies on you for most of their financial assistance – be it a parent or great aunt twice removed – you can claim them as dependents as long as no one else claims them. But keep in mind that if your relative is considered a qualifying child (even if no one claims them), you cannot claim them as a dependent on your tax return.
In order for you to claim a relative as a dependent, that family member cannot have a gross annual income above $5,050 in 2024 and $4,700 in 2023. Gross income includes all earned and unearned income.
The relative who you want to claim as a dependent must also live with you for the entire year. There are exceptions for mothers, fathers, nieces, nephews and other relatives.
If someone died during the year, you can claim that relative as a dependent for the whole year as long as they lived with you up until their death.

For a full list of relatives who you can claim even if they don’t live with you, you’ll need to review IRS Publication 501.

Bottom Line

Before you file taxes, you’ll need to find your dependents’ Social Security numbers. That way, you can include that information on your tax return. You cannot claim someone as a dependent if you don’t have access to a Social Security number, individual taxpayer identification number (ITIN) or an adoption taxpayer identification number (ATIN) for that person.

Tax Planning Tips

A financial advisor with tax expertise can help you manage your taxes and potentially reduce your liability. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now..
Use SmartAsset’s income tax calculators to help you figure out your federal, state, and local taxes. And if your taxes are complicated, it’s a good idea to work with a professional tax preparer or a tax prep program.