Who can you claim as a dependent?
Cornelius Davis, CFP, ChFC, EA
Financial Planner/Tax Professiional
Since the 2018 tax law changes took effect, claiming dependents looks a lot different. In the past individuals were able to take up to a $4050 deduction for each dependent they claim. After 2018, those exemptions went away and were replaced with qualifying credits including:
·???????Child Tax Credit
·???????Additional Child Tax Credit
·???????Credit for Other Dependents
·???????Earned Income Tax Credit
·???????Child and Dependent Care Credit
·???????Adoption Credit
·???????Medical Expenses
·???????American Opportunity Credit & Lifetime Learning Credit
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A?dependent?is a child or other relative who relies on you for financial support (housing, food, clothing, etc.) There are two categories under which dependents can be claimed.
1. Qualifying child – A qualifying child is:
2. Qualifying relative ?- A qualifying relative is:
Benefit of Claiming Dependents
Although claiming dependents no longer directly reduces your taxable income, there are still several benefits for claiming dependents. For example, dependents qualify a person to claim head of household which has a larger standard deduction than someone with no dependents. Subject to income thresholds, dependents may also qualify someone to claim the Child Tax Credit, Earned Income Credit, Child and Dependent Care Credit, Additional Child Tax Credit or Credit for Other Dependents. All these credits reduce a person’s overall tax liability.
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