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Can You Really Claim an Adult Child as a Dependent On Your Taxes?

It’s official: the economy is really in bad shape. Adult children that have long since left home and started careers are now having to suck up their pride and go back to live in their parent’s house. This isn’t necessarily a bad thing — it’s a blessing to have parents that you can lean on when times are hard. But the additional expense of having adult children back in a home where this was unexpected can really make things awkward. What do you really do when you know that things need to be adjusted, but you’re just not sure how to make everything connect together?

You need to start looking at places where you can save money. And tax time is a good time to think about all of the different ways that you can save money. Claiming a child on your taxes is straightforward when they’re actually child-age, but what happens when they reach adulthood? Does the situation change?

Actually, it does in a big way. You see, it doesn’t matter if you are housing and feeding them — you cannot automatically claim the person as a dependent. To be a qualified child in the eyes of the IRS, there’s a few other factors that have to be included in order for you to get that boost to your standard deduction.

First and foremost, the relationship has to be there. This means that the individual that you’re trying to claim must be your child, stepchild, foster child, step-sibling or a descendant of one of those groups (grandchild).

From here, the qualified child in question must be under 19, or under 24 if they were a full time student.

They also must have lived with you for more than half of the year, barring separation/divorce exceptions.

The biggest issue though, is support. Your adult child cannot have provided over half of their own support during the year. You will need to calculate the college costs, food, clothing, and medical and dental expenses. You also need to make sure that your child’s income doesn’t exceed the amount you spent on support and that you have met all of the other tests.

So there’s good news and bad news here, unfortunately. If you were trying to look for a way to really make sure that you’re going to be able to take care of everything in terms of adding dependents, you might not be able to claim the oldest children. However, the young ones that are still in school? You could definitely claim them on your taxes just fine.

But what about the other side of the coin? Surely the IRS has something to say about people that are supporting adult children that fail the age test? They do, actually.

The rules indicate that in order to claim a qualifying relative, the relative in question must have a gross income of less than the amount of the personal exemption. The income test puts a lot of adult children out of the running as qualified dependents because a part time job will be more than the personal exemption by far.

If we’re going to talk about adult children, we would need to flip the situation around to look at aging parents as well. When you know that your parents aren’t going to be able to take care of themselves, you can step in and tend to them and possibly get a tax break in the process.

If they are only on Social Security, then they have no income that will be weighed — Social Security isn’t included in the test. Yet if they earn more than $3700 from other sources, then you will not be able to claim them.

Keep in mind that your parent doesn’t have to live with you. If they live in an apartment or an assisted living facility, you can still claim them as long as the other needs as met.

Given the rising number of people moving back home, the IRS is definitely looking at returns very carefully. Make sure that you don’t try to bluff your way through things and hope that the IRS just ignores it — trust us, they really won’t. You will need to make absolutely sure that you have all of your ducks in a row!