How many dependents can I claim? – Requirements, How to Claim

What is a dependent?

A dependent is someone other than the taxpayer or spouse who qualifies to be claimed on another person’s tax return. They rely on someone else for financial support, such as shelter, food, clothing, and other essentials. This typically includes children or relatives but can also include non-relatives like a domestic partner.

Listing someone as a dependent on your tax return signifies to the IRS that you meet the criteria to claim them, potentially unlocking valuable tax benefits.

How Claiming Dependents Affects Your Taxes

Before 2018, each dependent claimed resulted in an exemption deduction from taxable income. This was replaced by the 2017 Tax Cuts & Jobs Act with increased standard deductions and potentially more beneficial tax credits like the Child Tax Credit and Other Dependents Credit.

Credits directly reduce your tax liability, while deductions reduce the amount of income subject to tax. Understanding the difference is crucial for maximizing tax savings.

Claiming dependents can lead to significant tax breaks through several avenues:

• Earned Income Tax Credit (EITC): A refundable credit for low-to-moderate-income working individuals and families. The maximum EITC amount for 2023 is $7,430 for taxpayers with three or more qualifying children. See the IRS announcement for other EITC income limits and amounts.
• Child and Dependent Care Credit: Helps offset childcare costs for qualifying dependents. The percentage of expenses covered and income limits depend on your specific situation. See IRS Publication 503, Child and Dependent Care Expenses for details.
• Child Tax Credit: Up to $2,000 per qualifying child under 17. See IRS Publication 972, Child Tax Credit, for more details.
• Credit for Other Dependents: $500 for each qualifying relative. See the IRS page on the Credit for Other Dependents for more information.
• Adoption Credit: A nonrefundable credit of up to $15,950 for qualified adoption expenses in 2023. See Form 8839, Qualified Adoption Expenses for details.
• Medical Expense Deduction: Eligible unreimbursed medical expenses exceeding 7.5% of your adjusted gross income (AGI) can be deducted if you itemize. However, with the increased standard deduction, itemizing might not be beneficial for many taxpayers. See IRS Publication 502, Medical and Dental Expenses for more details.
• Education Credits (American Opportunity and Lifetime Learning): Help cover higher education expenses. See IRS Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits), for more details. The Lifetime Learning Credit phaseout begins at $80,000 for single filers and $160,000 for joint filers.

Who Qualifies as a Dependent?

The IRS defines two types of dependents:

• Qualifying Child
• Qualifying Relative

Both types must meet these general requirements:

• Citizen or Resident: Must be a U.S. citizen, U.S. national, U.S. resident, or a resident of Canada or Mexico.
• Not Claimed Elsewhere: Cannot be claimed as a dependent on another person’s return.
• Not Filing Jointly: Cannot file a joint return with a spouse (except for specific refund situations).

Qualifying Child

In addition to the general requirements, a qualifying child must also meet these criteria:

• Relationship: Your son, daughter, stepchild, foster child, sibling, or a descendant of any of these.
• Age: Under 19, under 24 if a full-time student, or any age if permanently and totally disabled.
• Residency: Lives with you for more than half the year (exceptions apply).
• Support: Does not provide more than half of their own support.

Qualifying Relative

A qualifying relative must meet the general requirements and these additional criteria:

• Not a Qualifying Child: Cannot be a qualifying child of any taxpayer.
• Relationship or Residence: Either lives with you all year as a member of your household or meets specific relationship criteria. See Publication 501 for a list of qualifying relatives.
• Gross Income: Below $4,700 for 2023.
• Support: You provide more than half of their support.

Identification Requirements for Dependents

To claim a dependent, you’ll need their taxpayer identification number. This can be one of the following:

• Social Security Number (SSN): For U.S. citizens and eligible residents.
• Individual Taxpayer Identification Number (ITIN): For certain non-resident and resident aliens who don’t qualify for an SSN.
• Adoption Taxpayer Identification Number (ATIN): A temporary number used while adopting a child who is eligible for an SSN.

Frequently Asked Questions

How much can a dependent child earn?

A qualifying child can earn any amount as long as they don’t provide more than half of their own support. A qualifying relative’s gross income must be below $4,700 for 2023.

When does a child need to file a tax return?

A child’s filing requirement depends on their income type and amount. Consult IRS Publication 17 or a tax professional for specific thresholds.

When should I stop claiming my child?

When they no longer meet the age, support, or residency requirements for a qualifying child. They might still qualify as a qualifying relative.

Can I claim adult dependents?

Yes, if they meet the qualifying relative criteria. The income limit often poses the biggest challenge.

Is there a limit to the number of dependents I can claim?

No, there’s no limit as long as each dependent meets the IRS requirements.

Disclaimer: This information is for general guidance only and does not constitute professional tax advice. Consult with a qualified tax professional for personalized advice.