Dependent Exemptions ~ Texas Taxpayer Assistance Project

A dependent is a person -- not you or your spouse -- who lives with you. A dependent exemption is a tax deduction on your tax return. A tax deduction helps you pay less income taxes. A tax deduction might even increase your tax refund.

A dependent exemption is not a refund. It will only reduce your taxes. If you do not owe taxes, it will not give you money. It is not like the Earned Income Credit, which will give you money even if you don’t owe taxes.

Can I Claim a Dependent Exemption?

You can claim a dependent, if the person meets four tests:

1. Qualifying Child OR Qualifying Relative Test

The person must be related to you or live in your household. Your dependent must be either a qualifying child or a qualifying relative.

ü Qualifying Child Test

Your qualifying child:

a. Must be your child, step-child, adopted child, foster child, brother, sister, stepbrother, stepsister, or child of any of these;

b. Must have lived with you for more than half of the year;

c. On December 31, must be under 19 years or under 24 years if a full-time student, or any age if permanently and totally disabled; and

d. Must not provide more than half of his/her own support.

If a foster child has lived with you the entire year, and you cared for the child as your own, the foster child is considered your child. A legally adopted child is considered your child. A child born alive during the year will meet the test even if the child only lived for a moment.

ü Qualifying Relative Test

Your qualifying relative:

a. Must be related to you or any other person who lived in your home all year;

b. Cannot be a qualifying child of some other person;

c. Must have gross income of less than $3,300 (for 2006); and

d. You must provide more than half the person’s support.

A person not related to you can still be your dependent if the person lived in your house all 12 months.

A person who died during the year, but was a member of your household until death may be your qualifying relative.

2. Citizen or Resident Test

Your dependent must be a U.S. citizen, a resident of the United States (does not have to be a legal resident), or a resident of Mexico or Canada.

3. Joint Return Test

In most cases, your dependent cannot file a joint tax return with a spouse. Please see a tax professional for an exception to this test.

4. Dependency Test

You cannot be a dependent of another person and claim dependents on your own return.

How Do I Know I Provided Over Half of a Person’s Support?

Compare the support that you gave the person to the total support that the person received.

Support is food, clothing, medical, dental, education, housing, utilities, transportation, and recreation.

Benefits like TANF, food stamps, and housing are support from the government. If you receive public benefits and use the benefits for your dependent, this is NOT support from you.

Can I Claim Someone as a Dependent if They Do Not Have a Social Security Number?

Yes. You may claim your dependent if they have an Individual Taxpayer Identification Number (ITIN). You cannot claim a dependent who does not have an ITIN or a valid Social Security Number.

The ITIN is a nine digit number beginning with the number “9”. It looks like a Social Security Number. Example: (900-00-0000)

Your dependent can get an ITIN even if they do not qualify for a Social Security Number! They can get an ITIN by filling out a Form W-7.

You can get a Form W-7 from the IRS Website (www.irs.gov). You can also call the Texas Taxpayer Assistance Project at 1-888-988-9996 (toll-free).

What if I am Divorced or Separated?

If you are divorced or separated, the parent who lives with the child for most of the year is usually the parent who can claim the child as a dependent.

The parent who does not live with the child can claim the child as a dependent only if the following are true:

(1) The parent has a higher income than the parent who lives with the child;

AND

(2) The parent who lives with the child signs a release (IRS Form 8332). The parent who lives with the child can let the other parent claim the dependent exemption by signing Form 8332. A signed Form 8332 must be attached to the tax return every year. You can get this form on the IRS Website (www.irs.gov).

You should never sign part II of IRS Form 8332. Use part I of Form 8332 only.

If I Do Not Claim the Dependent Exemption, Can I Still Get the Earned Income Tax Credit?

Yes. Even if you do not claim the dependent exemption, you may be able to claim the same child for the Earned Income Tax Credit. The dependent exemption and Earned Income Tax Credit have some different rules.

Many people fail to claim the Earned Income Tax Credit when the other parent claims the dependent exemption. If your child lived with you for more than six months and you meet the Earned Income Tax Credit rules, you should claim the Earned Income Tax Credit.

If I Do Not Claim the Dependent Exemption, Can I Still Get the Child Tax Credit?

No. You must claim the dependent exemption to get the Child Tax Credit.

NOTE: This information cannot take the place of advice from an attorney. Each case is different and requires individual advice. You should contact an attorney if you need representation on a tax matter or you have questions. Pursuant to Internal Revenue Service Circular 230, we are required to advise you that if there is any tax advice contained herein, it is not intended to be used, and cannot be used by the addressee or any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

The Texas Taxpayer Assistance Project is funded in part by a grant from the Internal Revenue Service.

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