A taxpayer’s dependents don’t necessarily have to be children. You can claim certain adults as your dependents, too, but that’s subject to a lot of rules.
Defining Dependents for Tax Purposes
The IRS definition of a dependent is rather vague and it’s temporarily outdated, thanks to the TCJA. It’s someone “other than the taxpayer or spouse” who qualifies the taxpayer to claim a dependency exemption. In practical terms, it’s someone who literally “depends” on the taxpayer for support, and multiple IRS rules determine whether this is indeed the case. All dependents are either qualifying children or qualifying relatives other than a spouse, and they’re subject to varying requirements depending on which category they fall into.
Dependents and the Tax Cuts and Jobs Act
The TCJA eliminates the personal exemptions you could once claim for yourself and each of your dependents of any age—$4,050 per person off your taxable income in 2017, the last year in which these exemptions were available. They’re slated to return in tax year 2026 unless Congress takes steps to renew the TCJA. In the meantime, you can still benefit from claiming dependents because having them can make you eligible for other tax perks, including the advantageous head of household filing status and the child and dependent care tax credit. And the TCJA adds a tax credit for non-child dependents from 2018 through 2025.
The Credit for Other Dependents
Known as the “credit for other dependents,” this is the additional tax credit provided under the TCJA. It used to be that you could only claim the child tax credit for each of your minor dependents. They had to be age 16 or younger as of the last day of the tax year. You can still claim the child tax credit for your younger kids, but your 17-plus-year-olds are no longer left out in the cold as long as they qualify as your dependents. The TCJA offers the credit for other dependents for those over age 16. The 2021 American Rescue Plan also expanded the child tax credit to include 17-year-olds (but only for the 2021 tax year). Your dependent doesn’t have to be your child to allow you to claim this credit. They can be your parent, sibling, or cousin—or not even related to you at all. They must meet all the other IRS qualifying rules for adult dependents, however. The credit is $500 per dependent as of 2021.
What Qualifies Someone as a Dependent?
All dependents must be U.S. citizens, nationals, resident aliens, or residents of Canada or Mexico. They can’t file a joint return with a spouse if they’re married unless it’s solely for the purpose of claiming a refund because they owe no taxes. Dependents can’t claim dependents of their own. These rules apply to all dependents, but others apply separately to qualifying children or relatives.
The Relationship Rule
You must have a qualifying relationship with your would-be dependent. The individual must be either a close relative or must live with you. Qualifying relatives include siblings, half-siblings, and step-siblings. They also include your parents, step-parents, grandparents, and even great-grandparents. Nieces, nephews, aunts, and uncles can all be your dependents, and your in-laws are covered by this rule, too. Your adult children might also qualify as your dependent if you continue to support them—they’re just no longer your “qualifying children” if they’re 19 or older, or age 24 or older if they’re students. They become “qualifying relatives" instead. All of these related individuals can be your dependents without actually living with you, but unrelated adults must reside in your home. The relationship can be with either you or your spouse if you file a joint return. Your relationship with an unrelated dependent can’t be against the law in your state. For example, you might live with your significant other and meet all the other rules, but your living arrangement might be considered illegal if they’re married to someone else. You couldn’t claim them as a dependent as a result.
The Income Rule
There must also be a good reason why your would-be dependent is costing you so much money, namely that they earn very little money of their own. Their total taxable income from all sources must be less than the personal exemption amount for the year in which you want to claim them. The TCJA retains the exemption amount for purposes of qualifying for other tax breaks even though personal exemptions have been temporarily eliminated from the tax code—it’s $4,300 in 2021.
The Support Rule
Even assuming that your dependent meets the income rule, what they do with their money also matters. The support rule requires that you provide more than 50%—more than half—of their support. Let’s assume that your sibling earned $4,000 last year, so they would come in just under the wire on the income test. They rent a room in someone’s home, and their entire monthly living expenses are $500, or $6,000 a year. They use their entire income to pay these expenses, and you pay the $2,000 balance. They’re not your dependent. They can’t qualify even though they’re a relative who doesn’t have to live with you, and even though they earn less than the personal exemption for the year, because you’ve contributed just one-third to their support. If their monthly living expenses were $1,000 a month or $12,000 a year, and if they were to contribute the entirety of their $4,000 income, and you were to pay the rest ($8,000 a year), They would still qualify as your dependent.
Multiple Support Agreements
The support that your would-be dependent receives from others counts, too. Maybe you have two other siblings, and they both contribute some money every month to help the one who’s down on their luck. Your personal contribution must still be 50% or more unless your siblings sign Form 2120, the multiple support declaration form. A multiple support agreement often comes into play when siblings pool their money to support elderly parents. The agreement simply states the consent of the others to not claim the individual in question as a dependent. You must still contribute a minimum of 10% to their support, but this is considerably less than the 50% or more rule.
The Bottom Line
Yes, these rules are complicated. The IRS anticipates that many taxpayers will have problems trying to figure out who they can claim and who they can’t, so it provides an interactive tool on its website to help you along. Answer some questions, and the tool will give you a yes or no answer. The process takes less than 15 minutes.
