Congratulations! You have a child graduating from high school. Even more exciting is he or she is enrolled in college, planning their own life, and finding their own path. Your child may have a job for extra money. You are happy to see your child growing up to be an adult. Then you start to think. What about taxes next year? Can you still claim your child as a dependent? Does it matter how much he or she makes working part time while going to school? When do you have to stop claiming your child as a dependant on your taxes?
There are two set of rules for claiming a dependent on your tax return. The first set of rules is called, “Qualifying Child.” The second set of rules is called, “Qualifying Relative.” In this blog, we will review the rules for qualifying child. Stay tuned for our next blog article on the rules for qualifying relative.
Relationship Test
The child must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them.
Age Test
Any child under the age of 19 at the end of the year meets the age test. If the child is between the ages of 19 and 24, then the child must be a full time student to meet this test. There are no age restrictions for children that are permanently and totally disabled.
Residency Test
Your child has to have lived with you for more than half a year. There are exceptions for temporary absences such as; if the child is away for school, a child who was born or died during the year and if the parents are separated and the child lives with the other parent.
Financial Support Test
You must provide more than half of the child’s financial support throughout the entire year. Financial support may include cash given, expenses paid on behalf of the child (car insurance, food, and housing), college costs paid through loans, and fair rental value of the space used at your home.
Evaluating this test is based on the amount of income earned by your child. If your child earned $5,000 throughout the year working at a part time job, then you will need to provide $5,001 of financial support to meet this test.
Return Test
Generally, you can’t claim a married child as a dependent if the married child filed a joint return with his or her spouse.
If your child files his or her own tax return, the child must not claim themselves as a dependent on the tax return.
Other Rule
The child has to be a U.S. citizen, U.S. resident alien, a resident of Canada or Mexico, or a U.S. national. There are exceptions for adopted children.
If your child doesn’t meet any one of these rules, then you still may be able to claim the dependency deduction under qualifying relative rules.
IRS. “Personal Exemptions and Dependants.” Publication 17 (2016), Your Federal Income Tax. IRS, n.d. Web. 01 June 2017.