Who qualifies as a dependent??
Who is a qualifying child for a dependent deduction?
A qualifying child is a child that meets four tests: relationship (very specific), residence (live more than one-half the year generally), age (under age 19 unless a full time student), and support (provide greater than one-half of the total support).In general, to be a taxpayer’s qualifying child, a person must satisfy four tests:
Relationship — the taxpayer’s child or stepchild (whether by blood or adoption), foster child, sibling or stepsibling, or a descendant of one of these.
Residence — has the same principal residence as the taxpayer for more than half the tax year. Exceptions apply, in certain cases, for children of divorced or separated parents, kidnapped children, temporary absences, and for children who were born or died during the year.
Age — must be under the age of 19 at
the end of the tax year, or under the age of 24 if a full-time student for at least five months of the year, or be permanently and totally disabled at any time during the year.
Support — did not provide more than one-half of his/her own support for the year.
Interestingly, the IRS will default the dependent to the one who has more adjusted gross income or "AGI".
The effects of an incorrect dependent are huge. It can consist of adjustments to one or more of the following:
1. Dependent deduction lost
2. Filing status impact (i.e. head of household)- tax rates, standard deductions, etc.
3. Child tax credits
4. Child and Dependent Care Credit, and
5. Earned Income Tax Credit
And, once disallowed by the IRS, it is disallowed forever until the dependency exemption is justifed to the IRS.