As tax season approaches, it’s important to know who you can claim as a dependent. Many people are unaware that they may be able to claim adult dependents on their taxes, which can lead to missed opportunities for tax savings.
Understanding Adult Dependents
According to the Internal Revenue Service (IRS), an adult dependent is a person who meets certain criteria:
- They are not claimed as a dependent by someone else
- They are a U.S. citizen or resident alien
- They have gross income of less than $4,300 in 2020
- You provide more than half of their financial support for the year
- They live with you for the entire year or meet certain exceptions
If your situation meets these requirements, you may be able to claim an adult dependent on your taxes.
Claiming an Adult Dependent: The Process
To claim an adult dependent on your taxes, there are several steps that you need to take:
- Obtain their Social Security number and other personal information.
- Determine if they meet all the qualifications mentioned above.
- Complete IRS Form 1040 along with Schedule EIC (if applicable) and attach it to your tax return.
- Provide any additional documentation required if claiming head of household status.
It’s important to note that claiming ineligible individuals as dependents can result in penalties from the IRS.
The Benefits of Claiming Adult Dependents
Claiming adult dependents can bring about significant tax benefits such as:
- Eligibility for higher standard deductions
- Increased eligibility for education-related credits like American Opportunity Tax Credit (AOTC).
- Potential eligibility for earned income credit (EIC).
By correctly identifying eligible adults whom you might be supporting financially, you could save money come tax time.
Can I claim my elderly parent as a dependent on my taxes?
Yes, if your elderly parent meets certain criteria, you may be able to claim him or her as a dependent on your taxes. To qualify, the person must be a U.S. citizen or resident alien and meet specific income requirements (less than $4,300 in gross income for 2020). In addition, you must provide more than half of their support during the year and they cannot file a joint tax return with anyone else.
Can I claim my adult child who is still living at home as a dependent?
It depends on several factors. If your adult child is under age 19 or up to age 24 and attending college full-time, they may qualify as your dependent if they meet other residency, relationship, and financial support tests. However, an adult child over age 24 generally cannot be claimed unless he or she is disabled and meets additional criteria.
What qualifies someone as a “qualifying relative” for tax purposes?
A qualifying relative can include an individual who does not meet the IRS’s definition of a qualified child but satisfies four tests: (1) residency (lived with taxpayer all year or is related); (2) gross income test ($4,300 limit for 2020); (3) support test; and (4) not filing jointly test (cannot file jointly with spouse). This could include elderly parents or other relatives who are non-U.S citizens that lived in the US during some part of the year but do not qualify as dependents based on citizenship/immigration status.
In conclusion, by understanding what constitutes an adult dependent and following the correct procedures for claiming them on your taxes, you may be able to take advantage of significant tax-saving opportunities. Don’t forget to consult a professional or refer to IRS guidelines for more detailed information.