Federal Tax Dependent Definition

By Don Masters, C.P.A., M.B.A.
Tax Dependent Definition

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The Internal Revenue Service allows for an exemption credit for each dependent the taxpayer can claim. The credit is a dollar amount, which directly lowers your taxable income and decreases your annual tax liability. While the family dog is not a dependent, the definition does include more than just your kids.

Identification

If you have a teenager living with you, the idea of claiming all their friends as dependents has probably crossed your mind; after all, they eat you out of house and home. The Internal Revenue Service provides a different idea about this with some clear criteria in the definition of a dependent.

According to the IRS, the "term dependent means a qualifying child or a qualifying relative." Only these two types of individuals qualify as a dependency exemption. Spouses are not considered dependents because they already receive a personal exemption credit.

Qualifying Children

The qualifying child definition includes any child that is yours by birth, marriage, adoption or one of your descendants. It also includes foster children, siblings, step-siblings or a descendant of any of these. At year-end, they must be under the age of 19, or 24 if they are a full-time student. If you have provided more than half their support, and they lived with you for more than half the year, you can claim them as a dependent. The IRS considers the child to have lived with you even if they are not home during periods of military service, education, vacation, illness or business.

Qualifying Relatives

The qualifying relative definition is a bit different from a child because relatives do not necessarily have to live with you to be your dependent. There are also no age requirements to meet. The taxpayer must still provide more than half of the person's support; however, the dependent cannot have gross income that surpasses the current exemption credit ($3,800 for 2012). They must be a relative by marriage, adoption, birth or a foster child. They can also be either an ancestor or descendant, but cannot be a foster parent.

Joint Return Test

Either the taxpayer or their spouse can meet the relationship requirement with the dependent when filing a joint tax return. If the taxpayers file separate tax returns, the dependent exemption is limited to the taxpayer who meets the requirements above. For instance, you cannot claim your spouse's uncle who does not live with you, even though you may provide half his support. Your spouse claims the exemption on her return.

Citizen Test

According to the Internal Revenue Service, if dependents are not a "U.S. citizen, U.S. resident alien, U.S. national or a resident of Canada or Mexico," they do not meet the dependent definition. These rules apply whether or not they are your qualifying child or relative.

Resources

About the Author

Don Masters started writing professionally in spring of 2008, and enjoys conveying interesting tax topics to his readers. He is a partner in an accounting firm in Arizona and enjoys writing about business and tax. Masters is a certified public accountant, and has a master's degree in business and a bachelor's degree in accounting.