How many dependents should I claim?

Filing your income tax returns can be rewarding if you understand all of the benefits you can enjoy, especially if you are one of the lucky taxpayers who can claim dependents. Every dependent you claim is a sure-fire way to lower your taxes as long as you understand who has the green light on your tax return. The rules can be a bit onerous, but you’ll want to pay attention to them because the people you least expect can be considered dependents and save you thousands of dollars.

What you need to know about dependents

Simply put, a dependent is someone you support. Prior to the implementation of the Tax Cuts and Jobs Act 2017, you could have a personal exemption for dependents, allowing you to score $ 4,050 for each person upon your return in 2017. These personal exemptions were suspended from 2018 to 2025 in favor of standard deduction amounts that are almost double what they were previously.

Now your goal is to identify all of the dependents you can claim on your tax return, and then determine if they can qualify you for tax bonuses, including:

1. Child tax credit (up to $ 2,000 per eligible child under 17).
2. Additional child tax credit (up to $ 1,400 refundable credit per eligible child).
3. Earned income tax credit (refundable tax credit for up to three dependents).
4. Child care and dependents credit (claim a credit for eligible expenses paid for children under 13).
5. Credit for other dependents (non-refundable credit of $ 500 for dependents not eligible for the child tax credit).
6. Head of household (increase in the amount of the standard deduction compared to the single declaration status).

Do not worry. Once you’ve broken everything down or used the IRS’s free tax filing options, you won’t be left spinning the wheels. To get started, make sure the dependent has a taxpayer identification number (i.e. Social Security number, individual taxpayer identification number, or an adoptive taxpayer identification number. ). You will need this information to receive the benefits.

Who is considered a dependent?

There are two categories of dependents: the eligible child and the eligible parent. The big prize is being able to claim someone as an eligible child, as this gives you a chance to earn more credits on your tax return.

Here’s a summary of the qualifications, but keep in mind that there are exceptions in the tax code, so don’t be afraid to refer to IRS publication 501 for more details.

To answer the children’s qualification test, you must check the box corresponding to these five conditions:

1. Age: Your child must be younger than you and be under 19. If the child is 19-24 years old, he or she must be a full-time student for five calendar months of the year. People who are “permanently and totally disabled” may be eligible at any age.
2. Residence: The child must live with you for more than six months of the year (unless the child was born or died in the tax year).
3. Relationship: The person must be related to you as your child, stepson, foster child, adopted child, brother or sister, half-brother or descendant of one of these.
4. Support: The child must not provide more than half of his support for the year.
5. Joint return: The child generally cannot be claimed if he is married and is filing a joint return with his spouse for the year.

On the other hand, claiming relative eligible status comes with a slightly different set of rules that you should be aware of:

1. Eligible child: The person cannot be considered your eligible child or the eligible child of another taxpayer.
2. Relationship: The person must live with you all year round as a member of your household or be a parent (aunts, uncles, grandparents, in-laws, etc.).
3. Gross revenue: The claimed person must have earned less than $ 4,300 in 2021 (as in 2020).
4. Support: You must provide more than half of the person’s support during the year.

Don’t limit your dependents

It is easy to write off anyone who is not a family member as not being a dependent. But you could miss out on valuable tax savings if you don’t double-check the rules.

For example, most people don’t think of claiming their partner, best friend, non-blood relative, boyfriend, or girlfriend as a dependent on their tax return. But you can add these people to your list under an eligible parent if they follow the four rules.

Get rewarded for your support

Be sure to claim dependents if they are eligible. You can automatically reduce your taxable income and be vying for other benefits on your tax return.

The best part is that there is no limit to the number of dependents you can claim. As long as they tick all the boxes, you can position yourself to save thousands of dollars when you file your taxes.