A dependent is a person other than the taxpayer or spouse who entitles the taxpayer to claim a dependency exemption. There are two different dependency categories. They are: qualifying child and qualifying relative. Each dependency exemption decreases income subject to tax by the exemption amount. The exemption amount for a dependent in tax year 2016 is $4,050. A taxpayer cannot claim a dependency exemption for a person who can be claimed as a dependent on another tax return.
To claim a qualifying child dependency exemption, all of the following dependency test must be met.
Member of household
Citizen or resident test
Joint Return test
Age or Student test
Member of household - The child must live with the taxpayer for more than half the year as a member of the taxpayer's household. You do not have to own the principle of abode or pay the maintenance costs, but the child must live with you for over half the year, except for temporary absences. (Temporary absences include attending school, taking vacations, and staying in the hospital.)
Relationship - The person must be related to the taxpayer in one of the allowable ways. They are: child, brother/sister, stepchild, stepbrother/stepsister, half brother/half sister, grandchild, niece/nephew or a legally adopted child or a child lawfully placed for adoption, as well as a foster child.
Citizen or Resident Test - The child is a U.S. citizens or national, or residents of the US Canada or Mexico.
Joint Return Test - Taxpayers will meet this test for persons who are:
married but do not file a joint return, or
married and file a joint return only to claim a refund of withheld tax; neither would have a tax liability on separate returns; neither the dependent nor spouse can claim personal exemptions on their joint return.
Age or Student Test - The child is under the age of 19 years of age at the end of the year, or under the age of 24 years of age at the end of the year and is a full-time student for at least 5 months. This test does not apply to a child who is permanently and totally disable at any time during the year...
Support Test - The child will meet this test if the taxpayer provided more than half of a person's total support for the entire year.
Total support items include:
food, clothing, shelter, education, medical and dental care, recreation, and transportation; and
welfare, food stamps, and housing provided by the state.