Wednesday, August 8, 2012

When to Claim a Dependent!


When it comes time to prepare your tax return there are many things that you need to consider. One of the most common questions I encounter as a CPA is who is considered a dependent. Although you make think that the answer is simple, many things determine if somebody is truly a dependent.
Dependency of Children
When it comes to children the best way to determine if they are under 18, live at home and you supply more that 50 percent of their income. From 19 to 24 you can claim them as a dependent if they are living at home the majority of the time and you are still contributing the majority of their income.
The One Up And Down Rule
Although you make think that you can only claim your children, there are other members of the household that can be claimed. If a person is one up or one down from you in terms of relatives than you might be able to claim them. This includes children, stepchildren, adopted kids, parents and stepparents. The general rule is that if you are providing over 50 percent of their support than you can claim them. However, there really is not great benefit to claiming some of these people, because the savings may not outweigh their expenses.
Claiming relatives is the most common way to claim someone as a dependent, but there are some cases where you may want to claim somebody who is not a relative. If this is the case, you need to contact a CPA. They will be able to help you determine if you can claim each individual in your household. There are a lot more restrictions if the individual is not related to you.
If you have any questions about dependency and taxes, then you need to contact an experienced CPA today.