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Only Qualifying Dependents can be claimed as a personal exemption on your personal tax return. So what constitutes a "Qualifying Dependent"? Well, it is either 1) A Qualifying Child under code sec 152(c), or 2) a Qualifying Relative under code sec 152(d).
A Qualifying Child, in general, is considered a Qualifying Dependent of a taxpayer if the child satisfies each of the following requirements:
- Has the same principal place of abode as the taxpayer for more than half the year.
- Is a child of the taxpayer or a descendant of a taxpayer, or a brother, sister, stepbrother, stepsister of the taxpayer or a descendant of any such relative.
- Hasn't attained the age of 19 as of the close of the calendar year or is a full time student (for at least 5 months) who hasn't attained the age of 24 as of the close of the calensar year, or is disabled.
- Hasn't provided over 1/2 of his or her own support for the calendar year.
If a child could be a qualifying child with respect to more than one individual (a child who lives with both a parent and a grandparent in the same house), and more than one person can claim the child under the above rules, the Tie-Breaking Rules come into play. Those Tie-Breaking Rules are as follows:
- If only one of the taxpayers claiming the child is the child's parent, that parent will claim the child
- If more than 1 parent can claim the child under the above rules (unmarried parents),the child is treated as a qualifying child of 1) the parent with whom the child resided for the greater amount of nights, or 2) if the child resides in the same household as both unmarried parents, the parent with the highest adjusted gross income.
- If the child is not claimed by either parent, the child is treated as a qualifying child of the taxpayer with the highest adjusted gross income.
Also, to be a Qualifying Child, you must be younger than the person claiming you
So why is a Qualifying Relative important and how does it come into play? Some who may qualify as a dependent may not be a Qualifying Child. Those individuals may be considered a Qualifying Relative and therfore become eligible to be claimed as a dependent. A Qualifying Relative is an individual:
- that is the taxpayer's son, daughter, brother, sister, nephew, niece, aunt, uncle, son-in-law, daughter-in-law, brother-in-law, sister-in-law, father, mother, grandfather, grandmother, grandson, granddaughter, stepson, stepdaughter, stepbrother, stepsister, stepfather, stepmother,
- whose gross income for the calendar year is less than the amount of the personal exemption ($3,700 for 2011)
It is also important to note that the Child Tax Credit may only be taken for a Qualifying Child
In addition, all Dependents must have a valid social security number. No social security number, no deduction for that Dependent!
As you can see, it may not be so cut and dry to determine who may claim a deduction for a Dependent!
Once again, we are always available to discuss your specific situation. For more information, please visit us at www.alphafingroup.com, or call us at 860-436-6546.