What Is a Qualifying Relative? Definition, Eligibility, and Tax Benefits
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Summary:
Understanding the concept of a qualifying relative is crucial for maximizing tax benefits. This comprehensive guide delves into what a qualifying relative is, the IRS tests to determine eligibility, the differences between a qualifying child and a qualifying relative, and how claiming a qualifying relative can impact your taxes. We’ll also explore the implications of the Tax Cuts and Jobs Act on this deduction and address frequently asked questions to ensure a thorough understanding of this important tax concept.
What is a qualifying relative?
A qualifying relative, as designated by the Internal Revenue Service (IRS), can be claimed as a dependent by a taxpayer if they have provided substantial financial support to that relative during the tax year. This relationship between the taxpayer and the qualifying relative can lead to various tax benefits and deductions. While the Tax Cuts and Jobs Act suspended the deduction for qualifying relative exemptions for tax years 2018 through 2025, taxpayers can still benefit from other tax incentives like the child tax credit, earned income tax credit, and child and dependent care credit.
Understanding qualifying relatives
To comprehend the concept of a qualifying relative fully, it’s essential to delve into the criteria set forth by the IRS. A qualifying relative is one of two dependents you can claim on your tax return, the other being a qualifying child. Before claiming someone as a qualifying relative, you must examine how much income your relative makes, how much support you provide for them, and your relationship with them. The IRS employs several tests to define a qualifying relative.
IRS qualifying relative tests
If you intend to claim someone as a qualifying relative, you must consider the following IRS tests:
- Your dependent cannot claim their own dependents.
- They cannot be married and file a joint return.
- They must be a citizen, national, or resident alien of the United States, or a resident of Canada or Mexico.
Furthermore, the qualifying relative must not be a qualifying child of the taxpayer or anyone else. They must either live in the household during the tax year or be related to the taxpayer in various ways, such as a child, sibling, parent, grandparent, niece or nephew, aunt or uncle, certain in-law, or step-relative. Even someone not related to the taxpayer can become a qualifying relative by living with the taxpayer throughout the year. In special cases, a person who died during the year but lived with the taxpayer until death or was born during the year and lived with the taxpayer for the rest of the year can also be considered a qualifying relative, even if they didn’t reside with the taxpayer for the entire year.
Additionally, the qualifying relative must have a gross income of less than $4,400 in 2022 and have received more than half of their financial support for the year from the taxpayer.
IRS guidelines
For a more detailed understanding of meeting the qualifying tests, you can refer to IRS Publication 501, Exemptions, Standard Deductions, and Filing Information. This official publication offers comprehensive guidance on how to file when multiple taxpayers provide support for the same person, limits of earning a salary or receiving money from other sources to stay under the limit for a qualifying relative, and what qualifies a person as living temporarily away from the taxpayer.
What is the difference between a qualifying child and a qualifying relative?
It’s essential to differentiate between a qualifying child and a qualifying relative for tax purposes, as they have distinct criteria for eligibility. While both can provide tax benefits, they serve different roles in tax deductions.
A qualifying child is commonly the taxpayer’s biological or adopted child but may also be a stepchild or a foster child. Additionally, siblings, half-siblings, or step-siblings may qualify as a qualifying child. Specific criteria apply to qualify as a child:
- A qualifying child must be younger than the taxpayer and under the age of 19 or a full-time student under 24 years old. However, this age requirement does not apply if the qualifying child is permanently disabled during the tax year.
Am I eligible for an earned income tax credit for a qualifying relative?
When it comes to claiming the Earned Income Tax Credit (EITC), it’s crucial to note that someone who only meets the “qualifying relative” test is never eligible to be claimed for purposes of the EITC. To qualify for the EITC, the relative must meet specific criteria:
- The relative must be a child, stepchild, eligible foster child, adopted child, brother, sister, half-sibling, stepsibling, or descendant of any of these individuals.
What is the support test when claiming qualifying relatives?
The support test is a significant aspect when claiming a qualifying relative. To claim someone as a qualifying relative, the taxpayer must provide more than 50% of the person’s support for the tax year. This support test differs from the one for a qualifying child, which tests whether the child provided more than one-half of their support. When calculating total support, taxpayers should compare their contributions with the entire amount of support the person received from all sources, such as taxable income, tax-exempt income, and loans.
Frequently asked questions
Can a non-relative become a qualifying relative?
Yes, someone who is not related to the taxpayer can become a qualifying relative by living with the taxpayer throughout the year. This includes individuals who died during the year but lived with the taxpayer until death or were born during the year and lived with the taxpayer for the rest of the year. The key criterion is the shared residence for the majority of the tax year.
Are there any income limits for a qualifying relative?
Yes, a qualifying relative must have a gross income of less than $4,400 in 2022 to meet the IRS criteria for dependency.
What tax benefits can I receive by claiming a qualifying relative?
Claiming a qualifying relative as a dependent can potentially make you eligible for various tax credits, such as the child tax credit, earned income tax credit, and child and dependent care credit. These credits can help reduce your overall tax liability and increase your tax refund.
How do I prove that I provided more than 50% of a person’s support for the tax year?
You can prove your financial support by maintaining records of your contributions, such as bills, receipts, and bank statements. These documents can demonstrate that you provided more than half of the person’s support during the tax year.
Is there a limit to the number of qualifying relatives I can claim on my tax return?
No, there is no specific limit to the number of qualifying relatives you can claim on your tax return, as long as each one meets the IRS criteria for dependency. However, you must provide more than 50% of each qualifying relative’s support and meet all other eligibility requirements.
Key takeaways
- Understanding the concept of a qualifying relative is essential for maximizing tax benefits.
- A qualifying relative is one of two dependents you can claim on your tax return, the other being a qualifying child.
- IRS Qualifying Relative Tests determine eligibility based on dependency, relationship, and income criteria.
- IRS Publication 501 provides detailed guidance on meeting qualifying tests and filing as a head of household.
- Amid the Tax Cuts and Jobs Act, the deduction for qualifying relative exemptions was suspended for tax years 2018 through 2025.
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