Six Criteria for Qualifying Relatives
- The dependent cannot be a qualifying child of another taxpayer.
- The dependent earns less than the personal exemption amount during the year. For 2013, this means the dependent earns less than $3,900.
- The taxpayer provides more than half of the dependent's total support during the year.
- The taxpayer is related to the dependent in certain ways.
- If the dependent is married, the dependent cannot file a joint return with his or her spouse.
- The dependent must be a citizen or resident alien of the United States, Canada, or Mexico.
- 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 might apply to people such as cousins, parents, grandparents, and other people supported by the taxpayer.
Qualifying Child TestGenerally, 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 particular 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 taxpayers to claim a qualifying relative, it will also be important to be diligent in making sure that no one else can claim the dependent under the qualifying child criteria.
Gross Income TestThe gross income test is tied to the personal exemption amount. For 2013, the personal exemption amount is $3,900.
A taxpayer cannot claim a dependent as a qualifying relative if that person's gross income is $3,900 or more (for 2013). "Gross income is all income in the form of money, property, and services that is not exempt from tax" (from Publication 501).
Total Support TestThe taxpayer must provide over half of a person's total support during the year. "Total support includes amounts spent to provide food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities" (from Publication 501).
There is an exception to 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.