Who are your Dependents from tax filing perspectively? This could be confusing to a lot of taxpayers.
Can the dependent have his or her own earned income? Do they have to live with you? Is there any age limit? These are the common questions.
Here are the general rules:
First of all, to claim someone as dependent, you have to ensure he or she has not claimed the exemption in their tax returns, he or she has not been claimed as dependent by others and, he or she is US citizen / resident / Citizen of Canada and Mexico.
On top of the above rules are met, then there are two paths to determine if someone can be your dependent from tax filing perspective.
1. Qualified Child
If the dependent is your child who is under 19 years old or 24 years old as full time student (at least 5 months to be full time student) in 2016, then you can claim your child as dependent via qualified child. The child can be your son, daughter, stepchild, adopted, and fostered. Their offspring can be your qualified child too.
There is no income limit of the qualified child as long as you support more than half of the child’s living.
If someone can’t be defined as qualified child, then you can see if this path, qualified relatives, is possible.
There is income limit. The qualified relative has to make less than $4,050 in 2016 in order to be eligible.
Also, unless he or she is your immediate family (such as parents, son and daughter, brothers and sisters etc), he or she must live with you to become your dependent.
Once you can claim your Dependents in the tax returns, you can enjoy the deduction of exemption of $4,050 per dependent, their medical expenses, tuition fees, etc. If applicable, the earned income credit, if any, could be increased too.