Today’s questions from TJMS listeners address tax filing and dependents.
If you’re filing taxes with dependents, why not wait until April?
Although we file taxes in April, we pay taxes year-round. Last year each dependent was worth a $3,700 exemption—and if you can claim a dependent, that could alter your paycheck withholding status. In other words, it’s information that can help right now.
If my husband adopted my son, what are the tax implications? What about grandparents raising grandkids. Are those "our" children in the eyes of the IRS?
A qualifying child is the first and most important kind of dependent. Big picture: if a minor lives with you and you consider him or her your dependent, the chances are good the IRS agrees. Qualifying children can be biological children, stepchildren, adopted children, foster children, siblings, or descendents of the above—grandkids, nieces, nephews. They must meet age requirements—under the age of 19 at year-end, or under 24 and full-time students, or permanently and totally disabled of any age.
What does the IRS mean by “live with you?” How much of the year?
Good question, because only one taxpayer can claim a given dependent. So if children live with you for more than half the year and you provide more than half their support, they’re your dependents. If it’s more complex—such as a 50/50 custody split there are tie-breakers for who gets to claim the dependent child. So, the answers are probably yes and yes: so long as you are not filing separately and claiming the son, the husband can claim him. The grandparents can pat themselves on the back and claim their grandchildren as dependents.
Do fathers paying child support get a tax break?
The same rules apply. If a father paying child support lives with the minor child for more than half the year and pays more than half the expenses for a child, he may be able to claim the child as a dependent. Otherwise, no—and so for most fathers paying child support, the answer will be no.
Can you claim your 80 year-old elderly parent a dependent for tax purposes?
The other type of dependent besides a qualifying child is a qualifying relative. The interpretation of relative is pretty broad, but they start with a big restriction: qualifying relatives cannot be qualifying children, because you can’t be both and children come first. Other than that adult offspring, parents, or siblings do count. Plus the parents and offspring of offspring, parents, and siblings count—grandkids, grandparents, nieces, uncles, and so forth.
That covers the “relative” part—what about them being dependents?
The important thing is they’ve got to truly depend on you. They can’t earn more than $3,700 per year, because then they have to file their own taxes. Similarly, they can’t be filing jointly as a spouse because then they are filing on their own. As with kids, you have to provide a majority of their support—more than 50%—and they have to live with you more than half the year. They also have to be a citizen or resident alien of the U.S., Canada, or Mexico.
So those taking care of their elderly parent have dependents?
That’s right. And note they don’t have to be elderly or infirm to qualify. The rules can be thorny, but at the end of the day the policies make plenty of sense. If a family member lives under your roof and you pay the vast majority of their way, chances are you can claim them as a child or a relative. Still, it’s always wise to double check the IRS website or your electronic tax preparation software to make sure.
If you have questions for Mellody Hobson, text them to “646464” (OHOHOH).