The Preparation of a Dependent Tax Return

If you have a child who is a dependent either in high-school or college and they received a pay check last year, it is likely that they will need to file a dependent tax return. The determination for this is based on the total taxable income they earned during the previous year.

Who Is a Qualifying Child When Filing a Dependent Tax Return?

A qualifying child does not have to be your own child. A qualifying child could be a minor brother or sister or a half-brother, half-sister, stepbrother or stepsister. You can also claim your own son, daughter, stepchild or foster child, or a child of any of these children.

It is important that the person you claim meets one of three sets of criteria. The first set is that the person you claim must be under age 19 at the end of the tax year. He or she must also be younger than you (or they could be younger than your spouse if the two of you are filing jointly).

The second set of criteria is that the person must be younger than age 24 at the end of the tax year and must be a student. The person still must be younger than you or a spouse if filing jointly.

The third set of criteria is that the person you claim must be permanently and totally disabled. This person may be any age — he or she does not need to be a minor in this case.

In order to claim the qualifying child, the child must have lived with you for the majority of the tax year. Additionally, the child must not have provided a majority of their own support for the tax year. Finally, the child cannot be filing a joint return unless that joint return is only filed for the purposes of a refund of income tax withheld or estimated tax paid.

Who Is a Qualifying Relative When Filing a Dependent Tax Return?

Relatives may qualify as dependents in one of two ways. One way is that he or she or must live with you all year. The relationship cannot be illegal under the laws of the federal government or state government. The second way relatives may qualify as dependents is by the nature of their relationship to you. The relative could be your child, stepchild, foster child or a child of any of these children. The relative could also be your sibling, parent, grandparent or other direct ancestor. Aunts, uncles, nieces and nephews also qualify, as do certain in-laws.

Further, in order to qualify, the qualifying relative must have a gross income of less than $4,000, and you must provide more than half of their total support for the year.

My Situation Is Complicated

If you still aren't sure whom you may be able to claim as a dependent, the IRS has a tool that you can use to determine who qualifies (here). The tool takes about 15 minutes to complete. In order to use the tool, you will need to know your marital status and your relationship to the dependent. You must also know the amount of support provided and basic income information, such as your adjusted gross income. Finally, you must know the terms of a multiple support agreement if no single person supplied the majority of the dependent's support.

Any dependent with income of over $12,950 (total earned income plus $400), is required to file a return. Those under this amount may still opt to file in order to receive a refund for their federal income tax withhold.

If a dependent of yours plans to file a return, there are a few things to be mindful of. First off, as a dependent, they entitle you to exemptions on your own return. These exemptions can only be taken by one taxpayer, as such, a dependent's tax return will look differently than a non-dependent's. For example, they cannot claim their own personal exemption, which means they will have a lower standard deduction, increasing their percentage of taxable income.

Preparing a dependent taxes using our software is straightforward and in most instances completely free. When filing just make sure to indicate that they can be claimed on another return and calculations will be adjusted accordingly.

Q&A: How can I find out if my child has been claimed on an ex's taxes?

If divorced taxpayers both claim a child as a dependent, the IRS will usually reject the return processed last. If the rejected return was electronically transmitted and the taxpayer wants to continue to claim the child as a dependent, they will need to mail in their tax return since the IRS can't process "tiebreakers" when both parents file electronically.

After both taxpayers have filed and claimed the child as a dependent, the IRS will typically send a letter to both taxpayers, requesting that one of the taxpayers amend their return. If neither taxpayer does, the IRS will ask for both to provide proof that the child was under their care.

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