6 Tax Credit Facts To Know Before Claiming an Adult Dependent

As a parent, you can claim your minor children as dependents on your taxes, helping you keep more cash in your wallet by reducing your tax bill.

But it’s also possible to claim adults as dependents in some situations. The Internal Review Service (IRS) affords a range of potential savings opportunities for those who claim adult dependents.

Before you claim an adult dependent on your tax return, here are some things to know.

Who wants to overpay on taxes? The IRS allows you to claim dependents in two categories: qualifying child or relative dependents. More on that later.

In all cases, this person must meet some key qualifications, including being a U.S. citizen, U.S. resident, or resident of Mexico or Canada. Dependents cannot file a joint return in most cases.

If you have a qualified dependent, you may receive a tax credit that lowers your tax obligation.

The maximum credit is $500 for each person. However, they must meet other requirements before you can claim them as a dependent.

The tax credit phases out based on how much money you earn. A phase-out means that the amount you can take as a credit is lowered based on your reported income for the year.

For individuals, the phase-out starts when your income is over $200,000. If you are married and filing a joint return, the phase-out starts at $400,000.

For every $1,000 of your adjusted gross income above those levels, the credit drops $50.

Dependents may be qualifying children if they are under the age of 19 — or 24 if they are students — for at least five months out of the tax year for which you are claiming them. 

They must live with you for at least six months of the year, and cannot be older than you. A qualifying child can be a biological child, adopted child, or foster child.

A half-sibling, stepsibling, or descendant may also qualify. If you have a foreign exchange student living with you temporarily but meeting the residency rule, they could also be eligible.

A qualifying relative includes a much broader range of people. They cannot be your qualifying child or the qualifying child of another taxpayer. They must earn under $4,700 annually, rely on you for half their support, and live in your household.

A qualifying relative can include many different kinds of people you support financially. This could include a brother or sister, a half-brother or half-sister, or a niece or nephew.

It could also include a stepbrother or stepsister, father-in-law, or mother-in-law.

Numerous rules determine if someone qualifies to be a dependent. It’s downright confusing in some situations.

The IRS has a web page titled, Does My Child/Dependent Qualify for the Child Tax Credit or the Credit for Other Dependents?

All you have to do is answer a few question prompts, and you will find out if your adult dependent meets the qualifications.

Reducing your taxes may boost your bank account if you provide the lion’s share of financial support to a child or adult who lives with you.

However, it’s always a good idea to speak with an accountant or other tax professional to ensure you're eligible to take the credit and that doing so is the right move for you.