Tax Services

Claiming Dependents on Your 2015 Tax Return

According to a Pew Research Center Study, a record 57 million Americans, or 18.1 percent of the U.S. population, lived in a multi-generational household in 2012. This is double the number who lived in such households in 1980. With the rise of young adults moving back home, this group has been a major driver of growth in multi-generational households. In fact, in 2012, the same Pew study revealed that roughly one in four individuals ages 25 to 34 lived at home, compared to just 11 percent in 1980. In addition, 22.7 percent of older adults ages 85 and older live in a multi-generational household, furthering the complexity of potential dependent deductions.

Aside from the intangible benefits of living with and caring for family members, there are also tangible benefits. In fact, if you support family members, you might reap the benefit of claiming them as a dependent on your tax return. Like any other deduction, you need to adhere to rules and procedures for claiming dependents. Here is more information to review prior to filing this year’s return:

First, Identify Your Dependent(s)

In simple terms, a person whose financial support is primarily provided by you – whether an adult or child – may be considered a dependent. In order to qualify for a dependency exemption, they must fit the bill. Here are the overarching rules used to determine whether you can claim someone as a dependent:

Qualifying Child

  • Must be your child, stepchild, foster child, sibling, half sibling, step sibling or a descendant of those.
  • Must have lived with you for more than half of the year*.
  • Must be a U.S. citizen, resident, or national, or resident of Canada or Mexico.
  • Must be: younger than you (or your spouse) and under the age of 19, or under the age of 24 if a full-time student; or permanently and totally disabled.
  • Must not have provided more than half of his or her own support for the year.
  • Must not be filing a joint return for the year.

For children of divorced or separated parents, there are special rules that apply. The rules apply when all of the factors are true:

  • One or both parents provided more than half of the child’s total support for the calendar year.
  • One or both parents have custody of the child for more than half of the calendar year.
  • The parents are divorced, legally separated, or live apart at all times during the last six months of the calendar year.

Generally, the parent who is the custodial parent has the right to the dependency exemption. The custodial parent is generally the parent with whom the child spent the most nights during the year. However, the custodial parent can release the child’s dependency exemption to the noncustodial parent by signing Form 8832.

Qualifying Relative

  • Must be a member of your household or related in one of the following ways:
    • Children (including legally adopted children), foster children, stepchildren, or their descendants, including grandchildren
    • Siblings, including half or step-siblings
    • Parents, grandparents or any other direct ancestors
    • Stepparents
    • Aunts or uncles
    • Nieces or nephews
    • Fathers-in-law, mothers-in-law, sons-in-law, daughters-in-law, brothers-in-law or sisters-in-law
  • Can’t be anyone’s qualifying child.
  • Generally, you must have provided more than half of his/her support for the year.
  • Must be a U.S. citizen, resident, or national (or resident of Canada or Mexico).
  • Can’t have a gross income exceeding $4,000 (for 2015).
  • Must not be filing a joint return for the year.

Once You Have Identified Your Dependent(s)

Do you meet the above criteria for claiming dependents? You generally can take an exemption for each of your dependents. Your exemption is subtracted from your Adjusted Gross Income, which reduces the amount of taxable income.

This year, the amount you can deduct for each exemption has increased from $3,950 in 2014 to $4,000. However, you can lose at least a part of the benefit of your exemptions if your adjusted gross income is $154,950 for a married individual filing a separate return; $258,250 for a single individual; $284,050 for a head of household; and $309,900 for married individuals filing jointly or a qualifying widow(er).

Other Considerations For Claiming Dependents

On top of the potential dependent exemption(s), you have an opportunity to claim additional deductions or credits for your dependent’s education or healthcare. Once you discover all the deductions and credits that are available to you, you’ll be able to save more money this year, and plan better for your family’s future.

Better yet, partner with one of our expert Tax Advisors through Block Advisors. With an average tenure of 15 years each, our Advisors are experts in complicated taxes.

Find an Advisor closest to you now.

 

* Or if a newborn meets the test as long as they lived with you for more than half of the portion of the year remaining after the newborn’s birth.

Insights Icon

Get Matched Today

Find Your Advisor