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How To Claim A Qualifying Relative As An Income Tax Dependent

For federal tax purposes, there are two types of tax dependents. A qualifying child is the most widely recognized type. The other dependent type, a qualifying relative, includes more than just immediate family members. In some situations, an unrelated household member may be eligible to be claimed as a qualifying relative.

The tax advantage of a qualifying relative is considerably less than that of a qualifying child. None of the income tax credits are applicable to a qualifying relative. The only advantage to claiming a qualifying relative is that your taxable income is reduced by the amount of the exemption for the dependent.

Extended family

For extended family members to be claimed as a dependent, they must have received over half of their support for the year from you. Also, their income for the year must have been under $3,950. Extended family members possibly eligible to be claimed as a qualifying relative include the following:

  • Parent or grandparent
  • Stepmother or stepfather
  • Aunt or uncle
  • An in-law

Dependents who are typically qualifying children may sometimes be qualifying relatives if they fail to meet all the requirements of a qualifying child. The IRS definition of a qualifying child is somewhat imprecise because it also includes siblings and their descendants.

A related family member who is a qualifying relative does not have to live with you to be claimed. For tax purposes, a cousin is not considered a family member. However, a cousin may possibly be claimed in the same manner as an unrelated household member.

Unrelated household member

The IRS definition of a qualifying relative is also a bit imprecise. An unrelated person who lives with you for the entire year may be claimed as a qualifying relative if the following conditions are also met:

  • You provide over half the person's support
  • The individual earned less than $3,950

Adult children

When children become too old to be claimed as a qualifying child, they sometimes become eligible to be claimed as a qualifying relative. However, their earnings must be under $3,950, and they must receive the majority of their support from you. As a related family member, they are not required to reside with you to be a qualifying relative.

A qualifying relative does make a tax filer eligible to file as head of household. Even so, the additional dependent included on your tax return helps offset the cost of their support. Contact a certified public accountant for more information about tax issues concerning families.

About Me

financial bookkeeping tips for contractors

As a renovation contractor, I have a lot of things to worry about each day. I have to think about my customers, my business, the insurance I need and even the employees that I have working for me. All of these things keep me busy enough without having to worry about keeping up with my financial bookkeeping each day. How do you keep up with the financial bookkeeping so that you don't make any errors that could cost you a whole lot of money? I have worked with my accountant to develop a process that has helped me and I have shared the tips he has taught me right here on my blog to help you.

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