This could add up to substantial savings on your tax bill.īeginning in tax year 2018 going through 2020, and again in 2022, exemption deductions were replaced by: Why? Because it could save you thousands of dollars on your taxes.įor tax years prior to 2018, every qualified dependent you claimed could reduce your taxable income by up to the exemption amount, equal to $4,050 in 2017. If you have a family, you need to know how the IRS defines “dependents” for income tax purposes. Beginning in 2018, the exemption deduction went away and was replaced by a typically more generous Child Tax Credit or the Other Dependent Credit depending primarily upon the age of the dependent and relationship to the person claiming the dependent. A credit is different from a deduction in that the credit can directly reduce your tax while a deduction can reduce the amount of income that is subject to tax. In tax year 2017, it amounted to $4,050 per qualifying dependent. Once you identify someone as a dependent on your tax return, you’re informing the IRS that you met the requirements to claim them as a dependent.įor tax years prior to 2018, taxpayers were allowed to reduce their taxable income by a certain amount for each dependent claimed on a tax return. Typically, this includes your children or other relatives, but it can also include people who aren’t directly related to you, such as a domestic partner. More generally speaking, a dependent is someone who relies on another person for financial support, such as for housing, food, clothing, necessities, and more. A taxpayer can’t claim a dependent if they are a dependent themselves, if the dependent files a joint tax return with a spouse (except in certain cases), or is claimed as a dependent on someone else’s tax return.įor tax purposes, a dependent is someone “other than the taxpayer or spouse” who qualifies to be claimed by someone else on a tax return.A qualifying dependent can have income but cannot provide more than half of their own annual support.The IRS defines a dependent as a qualifying child (under age 19 or under 24 if a full-time student, or any age if permanently and totally disabled) or a qualifying relative.The Credit for Other Dependents is worth up to $500. For tax year 2022, the Child Tax Credit is up to $2,000.
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