Dependents

Question 1

Who are two qualifying dependents ?

Give 5 examples.

Can a taxpayer’s spouse be claimed as a dependent?

Answer 1

Dependents are either a qualifying child or a qualifying relative of the taxpayer.

No, the taxpayer’s spouse cannot be claimed as a dependent.

Some examples of dependents include a child, stepchild, brother, sister, or parent.

Question 2

What tests must be met for all dependents?

Answer 2

A dependent may be either a qualifying child or a qualifying relative. Both types of dependents have unique rules, but some requirements are the same for both.

To determine if an individual can be claimed as a dependent, begin with the rules that apply to both qualifying child and qualifying relative dependents:

• Dependent taxpayer test
• Joint return test
• Citizen or resident test

Question 3

Can a taxpayer (or taxpayer’s spouse, if filing a joint return) who may be claimed as a dependent by another taxpayer claim anyone as a dependent on his or her own tax return?

Answer 3

No, a taxpayer (or taxpayer’s spouse, if filing a joint return) who may be claimed as a dependent by another taxpayer may not claim anyone as a dependent on his or her own tax return.

• Part I of the intake and interview sheet asks, “Can anyone claim you or your spouse as a dependent?” If taxpayers answer yes, they cannot claim a dependent

Question 4

Can a married person who files a joint return be claimed as a dependent?

What is the exception?

Answer 4

No, married person who files a joint return cannot be claimed as a dependent unless that joint return is filed only to claim a refund of withheld income tax or estimated tax paid.

Answer 5

To be claimed as a dependent, a person must be a U.S. citizen, U.S. resident alien, U.S. national, or a
resident of Canada or Mexico.
• If a U.S. citizen or U.S. national legally adopts a child who is not a U.S. citizen, U.S. resident alien, or
U.S. national, this test is met as long as the child lives with the taxpayer as a member of the household
all year. If all other dependency tests are met, the child can be claimed as a dependent. This also applies
if the child was lawfully placed with the taxpayer for legal adoption.
• Foreign exchange students generally are not U.S. residents and do not meet the citizen or resident test;
they cannot be claimed as dependents.

Question 6

What are the tests for a qualifying child?

Answer 6

Relationship
Age
Residency
Support

Question 7

How do dependents qualify for the Age test?

Answer 7

To meet this test, the child must be:

• Under age 19 at the end of the tax year and younger than the taxpayer (or the taxpayer’s spouse, if filing jointly), or

• A full-time student under the age of 24 at the end of the year and younger than the taxpayer (or spouse,if filing jointly), or

– To qualify as a student, the child must be enrolled in the number of hours or courses the school
considers full-time during some part of at least five months of the year. See Publication 17 for
additional details.

• Any age if permanently and totally disabled at any time during the year.

Question 8

An individual is considered permanently and totally disabled if what two conditions apply?

Answer 8

– He or she can’t engage in any substantial gainful activity because of a physical or mental condition.

– A doctor determines the condition has lasted or can be expected to last continuously for at least a year or can lead to death.

Question 9

How does a child meet the Residency test to be considered a qualifying child?

Give an example

Answer 9

To meet this test, the child must have lived with the taxpayer for more than half the year. The taxpayer’s home is any location where they regularly live; it does not need to be a traditional home.

For example, a child who lived with the taxpayer for more than half the year in one or more homeless shelters meets the residency test.

Question 10

What are three exceptions to the Residency Test for a qualifying child?

Answer 10

• The child is considered to have lived with the taxpayer during periods of time when either the child or the taxpayer is temporarily absent. due to illness, education, business, vacation, military service, institutionalized care for a child who is permanently and totally disabled, or incarceration.
• A child who was born (or died) during the year is treated as having lived with the taxpayer for more than half of the year, if the taxpayer’s home was the child’s home for more than one-half of the portion of the taxable year during which the individual was alive.
• Taxpayers may claim as a dependent a child who was born or died, or was kidnapped during the year, as long as the other dependency tests are met.

Question 11

The child is considered to have lived with the taxpayer during periods of time when either the child or the taxpayer is temporarily absent due to what instances? ( Hint: 7 examples)

Answer 11

the child is considered to have lived with the taxpayer during periods of time when either the child or the taxpayer is temporarily absent due to illness, education, business, vacation, military service, institutionalized care for a child who is permanently and totally disabled, or incarceration.

Question 12

Can a taxpayer claim a stillborn child as a dependent?

Answer 12

No, a taxpayer may not claim a stillborn child as a dependent.

Question 13

How does a qualifying child meet the Support Test?

When are a person’s own funds considered support?

Answer 13

To meet this test, the child cannot have provided more than half of his or her own support during the tax year. This test is different from the support test for qualifying relative.

A person’s own funds are not support unless they are actually spent for support.

Question 14

If a taxpayer chooses to treat governmental payments such as welfare, food stamps or housing as a way to provide support for others, is that considered to be the recipient providing support for the child?

Answer 14

Yes, state benefits provided to a person in need, such as welfare, food stamps or housing, are generally considered support provided by state. A proposed rule on which taxpayers may choose to rely treats governmental payments made to a recipient that the recipient uses, in part, to support others are treated as support of the others provided by the recipient, whereas any part of such a payment used for the support of the recipient would constitute support of the recipient by a third party.

For example, if a mother receives Temporary Assistance for Needy Families (TANF) and uses TANF payments to support her children, the proposed regulations treat the mother as having provided that support.

Question 15

If a child receives Social Security benefits that are used for the child’s own support, are the benefits considered to be provided by the child?

Answer 15

On the other hand, if a child receives Social Security benefits that are used for the child’s own support, the benefits are considered to be provided by the child.

Question 16

What benefits does the state provide to a person in need, that are generally considered to be support? (3)

Answer 16

Welfare, food stamps and housing

Question 17

Can the child be a qualifying child of more than one person?

What tax benefits can a person claim with a qualifying child? (7)

What is the exception?

Answer 17

Although a child could meet the conditions to be the qualifying child of more than one person, only one taxpayer can claim the child as a qualifying child for the following tax benefits (exception: if the special rule for children of divorced or separated parents or parents who live apart applies):

• Dependent
• Child tax credit
• Head of Household filing status
• Credit for child and dependent care expenses
• Exclusion from income for dependent care benefits
• Earned income credit
• Premium tax credit, generally

Question 18

Can two taxpayers agree to split the benefits of claiming the same qualifying child?

Answer 18

If two taxpayers have the same qualifying child, then only one taxpayer can claim all of the benefits for that particular qualifying child. They cannot agree to split these benefits.

Question 19

To determine which taxpayer can treat the child as a qualifying child and claim the benefits, What five rules must apply ( Also known as the Tie Breaker Rules)?

Answer 19

• If only one of the taxpayers is the child’s parent, the child is the qualifying child of the parent.

• If the parents file a joint return together and can claim the child as a qualifying child, the child is treated as the qualifying child of the parents.

• If the parents do not file a joint return together but both parents claim the child, IRS will treat the child as the qualifying child of the parent with whom the child lived for the longer period of time during the tax year. If the child lived with both parents the same amount of time, IRS will treat the child as the qualifying child of the parent who had the higher Adjusted Gross Income (AGI) for the tax year.

• If no parent can claim the child as a qualifying child, the child is treated as the qualifying child of the person who had the highest AGI for the tax year and who meets the requisite tests.

• If a parent can claim the child as a qualifying child but no parent does, the child is treated as the qualifying child of the person who had the highest AGI for the year, but only if that person’s AGI is higher than the highest AGI of any of the child’s parents who could claim the child. If the parents file a joint return together, this rule allows the parents to divide their combined AGI equally (between themselves).
Using these tie-breaker rules, taxpayers may be able to choose which one claims the child

Question 20

What are the tests for a qualifying relative?

Answer 20

The tests for qualifying relative are applied only when the tests for qualifying child are not met.

Dependents who do not meet the tests for qualifying child might meet the slightly different tests to be a qualifying relative. In addition to the dependent taxpayer, joint return, and citizen or resident tests, there are four additional tests that must be met for a person to be a qualifying relative. The tests are:

• Not a qualifying child test

• Member of household or relationship test

• Gross income test, and

• Support test

Question 21

Can a qualifying relative be any age?

Answer 21

Yes, unlike a qualifying child, a qualifying relative can be any age.

Question 22

What is the not a Qualifying Child Test?

What is the exception?

Answer 22

A child is not considered a taxpayer’s qualifying relative if the child is the taxpayer’s qualifying child or is the qualifying child of another taxpayer.

However, there is an exception to this statement. A child may qualify as the taxpayer’s dependent under the tests for qualifying relative, even if that child is the qualifying child of another taxpayer.

This is allowed only when the child’s parent (or other person for whom the child is a qualifying child) is not required to file an income tax return and either:

• Does not file a return, or

• Only files to get a refund of income tax withheld or estimated tax paid

Question 23

How does a taxpayer meet the Member of Household or Relationship Test?

How can the taxpayers be related to each other? (8)

Answer 23

To meet this test, the person must either:

• Live as a member of the taxpayer’s household all year, or

• Be related to the taxpayer in one of the following ways:

– Child, stepchild, foster child or a descendant of any of them
– Brother, sister, half-brother, half-sister, stepbrother or stepsister
– Father, mother, grandparent or other direct ancestor, but not foster parent
– Stepfather or stepmother
– Son or daughter of the taxpayer’s brother or sister (nephew or niece)
– Son or daughter of the taxpayer’s half-brother or half-sister
– Brother or sister of the taxpayer’s father or mother (uncle or aunt)
– Son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law

Question 24

When is an adopted child treated the same as a natural child?

Are these relationships that were established by marriage ended by death or divorce?

Answer 24

An adopted child is treated the same as a natural child for the purposes of the relationships such as:

– Child, stepchild, foster child or a descendant of any of them
– Brother, sister, half-brother, half-sister, stepbrother or stepsister
– Father, mother, grandparent or other direct ancestor, but not foster parent
– Stepfather or stepmother
– Son or daughter of the taxpayer’s brother or sister (nephew or niece)
– Son or daughter of the taxpayer’s half-brother or half-sister
– Brother or sister of the taxpayer’s father or mother (uncle or aunt)
– Son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law

For example, an adopted brother or sister is a brother or sister of the taxpayer. An adopted child includes a child who was lawfully placed with a person for legal adoption.

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

Question 25

Can an unrelated person who lived with the taxpayer for the entire year mee the member of household or relationship test?

When is it not met?

Answer 25

An unrelated person who lived with the taxpayer for the entire year can also meet the member of household or relationship test. If the relationship violates local laws, this test is not met.

For example, if the taxpayer’s state prohibits cohabitation, then that person cannot be claimed, even if all other criteria are met.

Question 26

Can cousins meet the relationship test for qualifying relative?

Can qualifying relatives be unrelated?

Can a taxpayer claim a housekeeper or other household employee as a dependent?

Answer 26

Yes, cousins can meet the relationship test for qualifying relative only if they live with the taxpayer for the entire year.

Yes, qualifying relatives can be unrelated, as long as they lived with the taxpayer all year.

No, A taxpayer may not claim a housekeeper or other household employee as a dependent.

Question 27

How can you meet the Gross Income Test?

What is considered gross income?

Does this test apply to qualifying children?

Does the gross income of an individual who is permanently and totally disabled include income from a sheltered workshop?

Answer 27

• To meet this test, the dependent’s gross income for the tax year must be less than the threshold amount.
• Gross income is all income in the form of money, property, and services that is not exempt from tax.
• Remember this test does not apply to qualifying children, only qualifying relatives.
• For purposes of this test, the gross income of an individual who is permanently and totally disabled does not include income from a sheltered workshop.

Question 28

What is the Support Test?

How is this Support Test different from the test for qualifying child?

How do you calculate the total support (4 sources)?

Answer 28

To meet this test, the taxpayer must have provided more than 50% of the person’s total support for the tax year.

Note that this support test is different from the one for a qualifying child, which tests whether the child provided more than one half of their own support.

When calculating the amount of total support, taxpayers should compare their contributions with the entire amount of support the person received from all sources (such as taxable income, tax-exempt income, and loans).

Question 29

What are Multiple Support Agreements? (Form 2120)

Answer 29

Sometimes no one provided more than half the support of a person. Multiple support means that two or more people who could claim the person as a dependent (except for the support test) together provide more than half the dependent’s support.

In this situation, the individuals who provide more than 10% of the person’s total support, and who meet the other tests for a qualifying relative, can agree that one of them will claim the person as a dependent for any applicable tax benefits.

• The taxpayer claiming the dependent must file Form 2120, Multiple Support Declaration or similar statement, with the tax return.

• The other taxpayers providing over 10% of the person’s support must provide a written and signed

statement agreeing not to claim the dependent for that year. The person who claims the dependent must keep a copy of this written statement as a record.

Question 30

What is the Special Rule for Children of Divorced or Separated Parents or Parents Who Live Apart? (4 points)

Answer 30

In most cases, the child is the qualifying child of the custodial parent. However, a child will be treated as the qualifying child or qualifying relative of his or her noncustodial parent if all the following conditions apply:

This rule does not apply for Head of Household filing status, the credit for child and dependent care expenses, or the earned income credit. For these benefits, the child must meet the residency test. The custodial parent may still qualify for these provisions even though the noncustodial parent can claim the dependent for other tax benefits.

1. The parents

– are divorced or legally separated under divorce or separate maintenance decrees or written
separation agreements, or

– lived apart at all times during the last six months of the year whether or not they are or were married

2. The child received over half of his or her support for the year from the parents. (Multiple Support Agreement rules do not apply.)
3. The child was in the custody of one or both parents for more than half the year.
4. The custodial parent signs a written declaration (Form 8332 or a similar statement) that he or she will not claim the child as a dependent for the year and the noncustodial parent attaches this declaration to his or her return. If the decree or agreement went into effect after 1984 and before 2009, the noncustodial parent may be able to attach certain pages from the decree or agreement instead of Form 8332. For a pre-1985 decree or agreement, see Publication 17.

This special rule is the exception to:

• The residency test for qualifying child

• The support test for qualifying relative

Question 31

Who is the Custodial and Noncustodial Parent?

Who is the custodial parent if the parents divorced or separated during the year and the child lived with both parents before the separation?

What would happen if the child lived with each parent for an equal number of nights?

Answer 31

The custodial parent is the parent with whom the child lived for the greater number of nights during the year.

The other parent is the noncustodial parent.

If the parents divorced or separated during the year and the child lived with both parents before the separation, the custodial parent is the one with whom the child lived for the greater number of nights during the rest of the year.

A child is treated as living with a parent for a night if the child sleeps:

• At that parent’s home, whether or not the parent is present, or

• In the company of the parent, when the child does not sleep at a parent’s home (for example, the parent and child are on vacation together).

If the child lived with each parent for an equal number of nights during the year, the custodial parent is the parent with the higher adjusted gross income.

Question 32

When can custodial parents revoke a release of claim to exemption they previously provided to the noncustodial parent?

What Form do they use?

Does the custodial parent have to provide, or make a reasonable effort to provide, the noncustodial parent with written notice of the revocation in the calendar year prior to the tax year in which the revocation is to take place?

Answer 32

Custodial parents can revoke a release of claim to exemption they previously provided to the noncustodial parent on Form 8332 or a similar statement.

The custodial parent must provide, or make a reasonable effort to provide, the noncustodial parent with written notice of the revocation in the calendar year prior to the tax year in which the revocation is to take effect