Philadelphia Estate Planning, Tax & Probate Attorney Steven J. Fromm & Associates, P.C.

A taxpayer may claim an exemption on his or her federal income tax return for each person he or she can claim as a dependent. A person can be claimed as a dependent only if he or she is a "qualifying child" or a "qualifying relative" of the taxpayer. This article explores the following requirements for claiming a dependency exemption based on being a qualified relative.

Member of Household or Relationship Test

To meet this test, a person must either:

Live with you all year as a member of your household. A person is considered t live in the taxapayer's home as a member of he household even if he or she is temporarily absent due to vacation, school business, illness, or military service. A person who died during the tax year, but lived in the taxpayer's home as a member of the household until death also qualifies. A dependent born during the year who becomes a member of the household immediately after birth is considered a member of the household for the entire year.
Be related to you in one of the ways listed under Relatives Who Do Not Live with You in the immediately following paragraph.

If at any time during the year the person was your spouse, that person cannot be your qualifying relative.

Relatives Who Do Not Live With You

A person related to you in any of the following ways does not have to live with you all year as a member of your household to meet this test:

Your child, stepchild, foster child, or a descendant of any of them (for example, your grandchild). Note, that a legally adopted child is considered your child.
Your brother, sister, half brother, half sister, stepbrother, or stepsister.
Your father, mother, grandparent, or other direct ancestor, but not foster parent.
Your stepfather or stepmother.
A son or daughter of your brother or sister.
A brother or sister of your father or mother.
Your son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law.

Any of these relationships that were established by marriage are not ended by death or divorce.

Gross Income Limitation

The relative's gross income for the year must be less than $3,650. Gross income includes all income in the form of money, property and services that is not exempt from tax, such as receipts from rental property, a partner's share of gross partnership income and unemployment compensation.

Support Test

The taxpayer must provide more than half of the person's total support for the year.

First determine the total support provided for that person. Total support includes amounts spent to provide food, lodging, clothing, education, medical, dental, insurance, transportation and similar necessities. Expenses that are not directly related to one member of a household must be divided amoung members of the household. Items that are not included in total support include: the person's own funds which are not actually spent for support, federal state and local income taxes paid by persons from their own income, social security and medicare taxes paid by persons from their own income, life insurance premiums, funeral expenses, scholarshps received by a taxpayer's child if the child is a full time student.

Second, determine the portion of that support you paid which must be more than half to pass this test.

In cases where no one individual pays more than 50% of an individual's support then Form 2120, Multiple Support Declaration, can be used in agreement between all support providers to decide which one will claim the exemption.

Dependent Taxpayer Test

A person is not a qualifying relative of a taxpayer if that person meets the requirements for being a qualifying child of any other taxpayer. But if the other taxpayer is not required to file a retuern for the year or only files a return solely for a refund claim, then the child is not a qualifying child of the other taxpayer.

If you could be claimed as a dependent by another person, you cannot claim anyone else as a dependent. Even if you have a qualifying child or qualifying relative, you cannot claim that person as a dependent.

Joint Return Test

A taxpayer generally cannot claim a married person as a dependent if he or she files a joint return.

Citizen or Resident Alien, Etc. Test

A taxpayer cannot claim a person as a dependent unless that person is a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico.