Six Criteria for Qualifying Relatives
To be claimed as a qualifying relative, the person must meet all of the following criteria:Not a qualifying child - The dependent cannot be a qualifying child of another taxpayer.
Gross Income – The dependent earns less than the personal exemption amount during the year. For 2008, this means the dependent earns less than $3,500.
Total Support – You provide more than half of the dependent's total support during the year.
Relationship – You are related to the dependent in certain ways.
Joint Return – If the dependent is married, the dependent cannot file a joint return with his or her spouse.
Citizenship – The dependent must be a citizen or resident alien of the United States, Canada, or Mexico.
TIPS
- These are the same five tests from the old rules for claiming a dependent.
- These rules apply to any dependent who is not a qualifying child.
- They apply to people such as cousins, parents, grandparents, and other people you support.
Qualifying Child Test
Generally, taxpayers will not be able to claim a dependent if that dependent qualifies to be the qualifying child of another taxpayer. So you will want to check the qualifying child rules to make sure no one else can claim the dependent.The IRS has clarified this criteria. A taxpayer may claim a dependent as a qualifying relative. A dependent will not be considered a qualifying child of another taxpayer if that dependent's "parent or (or other person with respect to whom the individual is defined as a qualifying child) is not required ... to file an income tax return and (i) does not file an income tax return, or (ii) files an income tax return solely to obtain a refund of withheld income taxes." Source: Notice 2008-5 (pdf). While this may make it easier for you to claim a qualifying relative, it will be more important than ever to be diligent in making sure that you can claim the dependent.
Gross Income Test
Generally speaking, a dependent is someone you support. So, logically, that person should not be making enough money to support himself or herself.The gross income test is tied to the personal exemption amount. For 2008, the personal exemption amount is $3,500. This amount increases to $3,650 in 2009.
You cannot claim a dependent who earns $3,500 or more (for 2008). Exceptions to this rule are children under age 19, or children under age 24 who are full-time students, by using the criteria for qualifying children. The children must be under age 19 or 24 at the end of the tax year. If the child has turned 19 during the year, then the child must be a full-time student for you to still claim him or her as a dependent. If the child has turned 24 during the year, then you can no longer claim the him or her as your dependent. If you support someone older than 19 (or 24) who has no income, or under $3,500 in income, then you may be able to claim this person as a qualifying relative if you meet the other four tests.
Total Support Test
You must provide over half of a person's total support during the year. Let's say two people equally support a dependent and split all expenses exactly 50-50. Then neither person can claim the dependent as a qualifying relative, because no one provides over half of the dependent's support.There are two exceptions for the Total Support Test. If multiple people support a single person, they may file a Multiple Support Agreement with the IRS to allow one person to claim the supported person as a dependent. For example, let's say three sons all equally support their mother. Since no one provides over half the mother's support, they could file a Multiple Support Agreement, IRS Form 2120 (PDF document) to allow one of the sons to claim the mother as a dependent. The second exception is for children of divorced parents. Generally, the custodial parent is allowed to claim the child as a dependent under the qualifying child rules. Three situations will allow the dependent to be claimed by someone other than the custodial parent. (1) All parties supporting a child file a Multiple Support Agreement. A Multiple Support Agreement, IRS Form 2120 (PDF document) would have to filed with the IRS. (2) The custodial parent releases his or her right to claim the dependent to the noncustodial parent. The Release of Claim to Exemption (IRS Form 8332) (PDF document) would have to be filed and attached to the noncustodial parent's tax return. (3) A divorce decree finalized before 1985 grants the non-custodial parent the right to claim the dependent if the non-custodial parent provides at least $600 of support during the year.
