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Rules for Claiming a Dependent

Taxpayers who can claim dependents are permitted a substantial reduction of taxable income.  The two types of dependents are qualifying child and qualifying relative, and each have four tests to satisfy.  To be a qualifying child, the taxpayer must meet the relationship test, meaning that the potential dependent is a son, daughter, stepson, stepdaughter, brother, sister, stepbrother, stepsister, or any descendants of this group.  Second, the dependent must be under age 19 or a full-time student under age 24, and a full-time student means that the dependent was enrolled full-time for 5 months during the tax year.  Third, the dependent must have the same principal residence for more than half a year (an individual living in college is considered a "temporary absence").  Fourth, the dependent cannot have provided more than half of his or her support in the tax year.

The other type of dependent is the qualifying relative, and must meet four similar tests.  First the dependent must satisfy either the relationship test or the residence tests.  The relationship test is satisfied if the individual is a parent, child, sibling, grandparent, uncle or aunt, or niece and nephew.  A cousin does not qualify.  If the dependent does not fulfill this test, he or she can satisfy the residence test if the dependent lived with the taxpayer for the full tax year.  Second, the dependent must satisfy the income test, which requires that the dependent's taxable income for the year to be less than the personal exemption for the year—$4,050 in 2016.  Finally, the support test must be met, and this requires the taxpayer claiming the exemption to have provided over half of the dependent's support in the tax year.

If the qualifying relative or qualifying child tests are met, then the taxpayer may claim the personal exemption of the dependent.  In 2016, the exemption amount is $4,050, meaning an individual could reduce their taxable income by $4,050.

For further information or questions on whether an individual would qualify as your dependent, contact your tax advisor.

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