Broker Check

Know which dependents will cut your tax bill

December 01, 2014

For any number of reasons, you could find yourself opening your home to relatives in need. In some cases, the guests could become fairly permanent occupants.

Who can be claimed as a dependent at tax filing time? Suppose that your nephew and his six-year old daughter lived with you for nine months during the current year. Can you claim them as dependents?

There are five basic tests that have to be met to claim someone as a dependent:

  1. Generally, the dependent must have earned less than $3,950 in 2014.
  2. You must have provided over one-half the dependent's support for the year.
  3. The dependent must not file a joint return with a spouse, except to claim a refund.
  4. A number of specified relatives can be claimed as dependents (but the children of your sibling's children are not on that list). If the individual is not among the specified relatives, he or she must have lived in your home as a member of the household for the entire year.
  5. Certain U.S. citizenship and/or residency tests must be met by the dependent.

If all five tests are met, you can claim your nephew as a dependent. However, your nephew's daughter can't be claimed since she misses the relationship test and did not live with you for the entire year.

If you have questions about dependents and your particular situation, please contact us.