Your son is off at college. Can you
still claim him as a dependent? The answer for most
parents is "yes." But, as often is the case
with tax questions, determining who can be claimed as
a dependent is not always a clear-cut exercise.
Dependent claims aren't limited to parents.
relative could qualify as a taxpayer's dependent
as long as he or she meets certain Internal Revenue
Making sure the requirements are met is critical because
dependents can help reduce your tax bill. In many cases,
you can claim certain tax-cutting deductions and credits
related to a dependent.
Even if these added tax breaks don't apply to your
situation, a dependent named on your return still can
trim your taxes. Each dependent directly translates
into an exemption, a specific dollar amount deducted
from your adjusted gross income.
The exemption amount is adjusted annually
for inflation and can be found on your tax return form.
On 2006 returns, each exemption
allows a filer to cut taxable income by $3,300. By lowering
your taxable income, your tax bill usually is a little
Tax definition of a child
Most often, dependent claims revolve around children.
Just when, for tax purposes, is a child a qualifying
child? The answer to that used to vary considerably,
depending upon which tax benefit you wanted to claim.
The key tax breaks associated with a child are the
dependency exemption, head of household filing status,
child tax credit, child and dependent care credit and
the earned income tax credit. Previously, each of these
tax situations had different requirements of how a child
could help you qualify for the separate tax breaks.
In an attempt to streamline the many rules connected to the assorted child-related tax benefits, the IRS created a uniform definition of a qualifying child. Although
there are still some variations (usually concerning
the age of the child), just who the IRS considers a
child for tax purposes is now more consistent.
"What was considered a child for each of those
benefits was a little confusing for some taxpayers,"
says Kathy Burlison, director of tax implementation
for H&R Block in Kansas City, Mo. "For some,
the changes will have some good consequences."
And, as is often the case with taxes, some will find
the changes will present new problems.
changes reflect changing families
The most significant change is in the area of adult
support. This used to be a key determinant of who got
to claim a child on a return. And it's one that posed
many problems, especially when a child lived with multiple
adults, several of whom provided money for the household.
"The traditional family won't see any change,"
says Burlison. "A single-parent family won't either.
But multigenerational families will see changes, so
you've got choices as to who gets to claim the child
for tax purposes."
"The tax law is catching up to changes in the
world," says Donna LeValley, tax attorney and contributing
editor to J.K. Lasser's annual tax guide. "We now
have single parents who've never married living with
an adult parent or grandparent."