How many dependents should I claim?

Declaring your taxes can be rewarding if you understand all the benefits you can take advantage of, especially if you are one of the lucky taxpayers who can claim dependents. Each dependent you claim is a safe way to reduce your taxes, as long as you understand who gets the green light on your tax return. The rules can be a little complicated, but you must pay attention to all of them because the people you least expect can qualify as dependents and save thousands of dollars.

What You Should Know About Dependents

In short, a dependent is someone you support. Prior to the implementation of the 2017 Tax and Employment Reduction Act, you could receive a personal exemption for claimed dependents, allowing you to earn $ 4,050 for each person on your return in 2017. These personal exemptions were suspended from 2018 to 2025 in favor of standard deduction amounts that are almost double what they used to be.

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Now, your goal is to identify all dependents that you can claim on your income tax return, and then determine whether they can qualify you for tax bonuses, including these:

1. Child tax credit (up to $ 2,000 per qualified child under 17).
2. Additional child tax credit (up to $ 1,400 refundable credit per eligible child).
3. Earned Income Tax Credit (refundable tax credit for up to three dependents).
4. Child and dependent care credit (request a credit for eligible expenses paid by children under 13).
5. Credit for other dependents (non-refundable credit in the amount of $ 500 for dependents not eligible for child tax credit).
6. Head of household (an increase in the standard deduction amount compared to the single order status).

Do not worry. After splitting it all up or using the IRS’s tax-free filling options, you won’t be spinning your wheels. To begin, make sure that the dependent has a taxpayer identification number (ie social security number, individual taxpayer identification number or an adoption taxpayer identification number). You will need this information to qualify for benefits.

Who qualifies as a dependent?

There are two categories of dependents: qualified child and qualified relative. The big prize is being able to claim someone as a qualified child because it gives you the chance to earn more credits on your tax return.

Here is a summary of qualifications, but keep in mind that there are exceptions to the tax code, so don’t be afraid to consult IRS publication 501 for more details.

To meet the child qualification test, you must check the box for these five requirements:

1. Was: Your child must be younger than you and under 19 years old. If the child is between 19 and 24 years old, he must be a full-time student for five months of the year. People with “permanent and total disabilities” can qualify at any age.
2. Residence: The child must live with you for more than six months a year (unless the child was born or died within the fiscal year).
3. Relationship: The person must be related to you as your child, stepson, adopted child, adopted child, brother, half-brother or descendant of one of them.
4. Support, support: The child must not provide more than half of his support for the year.
5. Joint return: The child cannot normally be claimed if he is married and submits a joint declaration with the spouse during the year.

On the other hand, claiming relative qualification status comes with a slightly different set of rules that you should be aware of:

1. Qualified child: The person cannot be considered your qualified child or the qualified child of another taxpayer.
2. Relationship: The person must live with you all year as a member of your family or be a relative (aunts, uncles, grandparents, stepparents, etc.).
3. Gross income: The person claimed must have earned less than $ 4,300 in 2021 (the same as in 2020).
4. Support, support: You must provide more than half of the person’s livelihood during the year.

Don’t limit your dependents

It is easy to dismiss anyone who is not a family member as not being dependent. But you can lose some valuable tax savings if you don’t check the rules.

For example, most people do not think about claiming their partner, best friend, non-blood relative, boyfriend or girlfriend as dependent on their tax return. But you can add these individuals to your list as a qualified relative, if they meet the four rules.

Be rewarded for your support

Don’t lose dependents’ claim if they qualify. You can automatically reduce your taxable income and compete for other benefits on your tax return.

The best part is that there is no limit to the number of dependents you can claim. As long as they check all the boxes, you can position yourself to save thousands of dollars by declaring your taxes.