Rules on Claiming Dependents

June 11th, 2008  |  Published in General  |  2 Comments

The follow rules regarding dependents was accurate for the 2007-filing year, you should review any updated dollar limits as the IRS publishes them and, as always, consult with a tax professional before making any decisions.

When it comes to dependents, the rules are fairly straightforward. It’s important for you to figure this out because it has a significant effect on your taxes, which in turn has an effect on your retirement decisions. Dependents come in two forms, the first is a qualifying child and the second is a qualifying relative.

Qualifying Child Dependents

A qualifying child dependent must satisfy these rules:

  • A son, daughter, step son, step daughter, eligible foster child, sibling or their descendent has to live with you for more than six months out of the year. This rules makes it so that no two people can claim the same dependents.
  • The child has to be under 19 or a full time student under 24. This rule is waived if the child is permanently disabled.
  • Child has to provide less than half of his or her own financial support.

Qualifying Relative

A qualifying relative has to follow these rules:

  • There is no age limit.
  • The relative must be of an approved relationship status, such as a parent or sibling.
  • The relative must have gross income less than $3,400 per year and the claimant must provide at least half of the relative’s overall financial support.

That’s it! Simple enough right?

  

Responses

  1. Insurance Audit At Work | HarvestingDollars says:

    June 13th, 2008 at 7:25 am (#)

    […] hopefully be painless, but I think it will help reign people who aren?t playing by the rules. My Retirement Blog recently posted a great summary of who can be included as a […]

  2. Carnival of Personal Finance #157: Third Anniversary Edition - Consumerism Commentary: A Personal Finance Blog says:

    June 16th, 2008 at 9:03 am (#)

    […] My Retirement Blog presents Reles on Claiming Dependents. […]