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Since the 2018 tax law changes took effect, claiming dependents looks a lot different. In the past individuals were able to take up to a $4050 deduction for each dependent they claim. After 2018, those exemptions went away and were replaced with qualifying credits including:

  • Child Tax Credit

  • Additional Child Tax Credit

  • Credit for Other Dependents

  • Earned Income Tax Credit

  • Child and Dependent Care Credit

  • Adoption Credit

  • Medical Expenses

  • American Opportunity Credit & Lifetime Learning Credit

A dependent is a child or other relative who relies on you for financial support (housing, food, clothing, etc.) There are two categories under which dependents can be claimed.

  1. Qualifying child – A qualifying child is:

  • Someone under age 18 at the end of the year.

  • A son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of one of these (for example, a grandchild, niece or nephew)

  • Someone who did not provide more than half of their financial support during the year.

  • Someone who lived with you for more than half of the year.

  • Someone who doesn’t file a joint return with their spouse or file jointly only to claim a refund for tax withheld.

  • Someone who is a U.S. citizen, U.S. national or U.S. resident alien.

  1. Qualifying relative  – A qualifying relative is:

  • Someone who is not your qualifying child or the qualifying child of any other taxpayer. (i.e. parent or in-laws)

  • Someone who lives with you all year or (b) someone related to you in one of the ways listed under Relatives who don’t have to live with you.

  • Someone who has gross income that’s less than $4,400.

  • Someone who did not provide more than half of their financial support for the year.

Benefit of Claiming Dependents

Although claiming dependents no longer directly reduces your taxable income, there are still several benefits for claiming dependents. For example, dependents qualify a person to claim head of household which has a larger standard deduction than someone with no dependents. Subject to income thresholds, dependents may also qualify someone to claim the Child Tax Credit, Earned Income Credit, Child and Dependent Care Credit, Additional Child Tax Credit or Credit for Other Dependents. All these credits reduce a person’s overall tax liability.

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