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Relationship — the person must be your child, step child, adopted child, foster child, brother or sister, or a descendant of one of these (for example, a grandchild or nephew).
Residence — for more than half the year, the person must have the same residence as you do.
Age — the person must be
Support — the person did not provide more than half of his or her own support during the year.
The new rules state that the qualifying child must not provide more than half of his or her own support. This is different from the old rules. Under the old rules, the taxpayer had to provide over half the support for the child. The change makes it easier for families relying on public assistance, charity, and gifts from family members to claim a dependent.
You might still be able to claim the child as a qualifying relative if the child does not meet the criteria to be a qualifying child. But the qualifying child rules always prevail over the qualifying relative rules. So you'll want to make sure the dependent would not qualify as a qualifying child for someone else before claiming a qualifying relative on your tax return.
The child will be the qualifying child of:
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.
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.
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