Can you claim a dependent on your tax return? If so, several federal tax breaks—including the earned income tax credit (EITC) and the child tax credit (CTC)—can lower your tax bill or even increase your refund.
Here's a quick look at who qualifies as a dependent and how claiming one can affect your income tax return.
- Tax credits and deductions lower your overall tax liability.
- A dependent for income tax purposes may be either a qualifying child or a qualifying relative such as a sibling or parent who you support.
- A dependent can only be claimed by one taxpayer in a tax year.
- Those you claim as dependents must satisfy certain qualifications.
What Is a Qualified Dependent?
A dependent is someone for whom you provide at least half of their financial support during the year—for household expenses, medical care, education, clothing, and the like. If you have a dependent, you qualify for several tax benefits that could save you money at tax time.
An individual can be a dependent of only one taxpayer in a tax year. To qualify as a dependent, the person must:
- Be a U.S. citizen, U.S. national, resident alien, or a resident of Canada or Mexico
- Have a valid taxpayer identification number (TIN) such as a Social Security number
- Not have filed a joint tax return for the year
- Not take a personal exemption if available for the tax year or claim someone else as a dependent. (The personal exemption has been suspended until at least 2025.)
A provision in the Tax Cuts and Jobs Act (TCJA) eliminated the personal exemption, which remains at $0 until 2025, when it may be restored or permanently eliminated.
Types of Dependents
Though all dependents must meet the general requirements listed above, you can't claim someone as a dependent unless they are your child or a qualifying relative. The IRS uses different tests to determine who qualifies.
What Are the Tests for a Qualifying Child?
Not all children are qualifying children under the tax laws. According to the IRS, a person must satisfy five tests to be a qualifying child:
- Relationship test. To meet this test, the person must be your child or stepchild (whether by blood or adoption), foster child, sibling or stepsibling, or a descendant of any of them.
- Age test. The person must be (a) under age 19 at the end of the tax year, (b) under 24 if they're a full-time student and younger than you, or (c) any age if they're permanently and totally disabled.
- Residency test. The person must share a principal residence with you for more than half the tax year. Exceptions apply for circumstances like temporary absences (e.g., for illness, education, or vacation) or the birth or death of a child during the year.
- Support test. The person must provide less than half of their own support for the year.
- Joint return. The person must not file a joint return for the year (unless they file only to claim a refund of income tax withheld or estimated tax paid).
What Are the Tests for a Qualifying Relative?
A person you claim as a qualifying relative must satisfy four tests:
- Not a qualifying child test. The person can't be your qualifying child or another taxpayer's qualifying child.
- Member of household or relationship test. The person must live with you all year as a household member. Otherwise, they must be related to you as your child, stepchild, foster child, or a descendent of any of them; your sibling, including half-siblings and step-siblings; your parent, step-parent, grandparent, or another direct ancestor (but not a foster parent); your aunt, uncle, niece, or nephew; or your daughter-in-law, son-in-law, mother-in-law, father-in-law, sister-in-law, or brother-in-law.
- Gross income test. The person's gross income for the year must be less than $4,700 for 2023. This increases to $5,500 for 2024. An exception applies if the person is disabled and has income from a sheltered workshop.
- Support test. You must provide more than half of the person's total support for the year.
Children of Divorced or Separated Parents
In the case of divorced or legally separated parents, a child is generally the dependent of the custodial parent—the one the child lived with for the greater number of nights during the year. If both parents had equal time during the tax year, the parent with the higher adjusted gross income (AGI) can make the claim.
Tax Benefits of Having a Dependent
A tax credit reduces the amount of tax you owe on a dollar-for-dollar basis. A tax deduction lowers your taxable income, so you owe less tax.
Of the two, tax credits are more favorable because they are subtracted off the top of your total taxes owed, saving you more money. You can claim several tax credits and deductions if you have a dependent.
Here's a rundown of the most common credits and deductions:
Child Tax Credit (CTC)
The CTC is a tax benefit granted to taxpayers for each qualifying dependent child.
The maximum amount for the 2023 and 2024 tax years is $2,000 for each qualifying child. The credit begins to phase out when the filer's modified adjusted gross income exceeds $200,000 ($400,000 in case of a joint return).
The refundable portion of the credit, also known as the additional child tax credit, maxes out at $1,600 in 2023, increasing to $1,700 for 2024.
The $500 nonrefundable credit for other dependents remains unchanged.
Earned Income Tax Credit (EITC)
The?EITC is a refundable tax credit that helps lower-income taxpayers reduce the amount of tax owed on a dollar-for-dollar basis.
Though the credit is available to taxpayers who don't have children, those with dependents will receive a higher credit. The credit increases with the addition of each child to the family up to three children.
Here's a look at the EITC AGI limits and maximum credit amounts for the 2023 tax year. The maximums reflect the amount of the credit for filers with three or more children:
|Earned Income Tax Credit (2023)|
|?Dependents||Single or Head of Household||Married Filing Jointly||Maximum EITC|
Source: Internal Revenue Service
Child and Dependent Care Credit
The child and dependent care credit provides relief to parents who pay for the care of a qualifying child or disabled dependent while working or looking for work. Depending on your income, you may qualify for both the child tax credit and the child and dependent care credit.
As of the 2023 tax year, you can include up to $3,000 of eligible expenses for a maximum credit of $1,050 if you have one qualifying dependent when calculating the credit. It rises to $6,000 of eligible expenses and a $2,100 credit if you have two or more dependents.
The percentage of those expenses allowed as a credit depends on your income (and your spouse's if you file a joint return). The maximum percentage is 35%, which is available to every eligible taxpayer with an AGI of $125,000 or less. As your AGI climbs, the credit is eventually reduced to $0. If your AGI is $438,000 or higher, you won't get the credit.
The child and dependent care credit is worth up to $1,050 for one dependent and up to $2,100 for two or more.
Student Loan Interest Deduction
The student loan interest deduction allows you to deduct up to $2,500 of the interest you paid on a student loan during the tax year. For example, if you fall into the 12% tax bracket and claim the full amount, the deduction would reduce your tax for the year by $300 ($2,500 × 12%).
If you paid less than $2,500 in student loan interest, your deduction is capped at the amount you paid.
The student loan must be taken out for you, your spouse, or your dependent, which can be a qualifying child or a qualifying relative.
For 2023, the deduction gradually phases out starting at a modified AGI (MAGI) of $70,000 for single filers, and $140,000 for married couples filing jointly.
American Opportunity Tax Credit
The American Opportunity Tax Credit (AOTC) helps offset the cost of the first four years of a student's postsecondary education. The credit allows a maximum annual tax credit of $2,500 per eligible student for qualified education expenses.
If the credit brings your tax bill to $0, you can get a refund of up to 40% of the remaining credit (up to $1,000).
Either the student or someone who claims the student as a dependent can take the AOTC on their income tax return. Your MAGI must be $80,000 or less ($160,000 if filing jointly) to claim the full credit. The credit begins to phase out if your MAGI is between:
- $80,000 and $90,000 for single filers
- $160,000 and $180,000 for joint tax filers
You can't claim the credit if your MAGI is above those thresholds.
Room and board, medical expenses, and insurance—or any qualified expenses paid for with 529 plan funds—don't count as qualified education expenses.
Medical and Dental Expenses Deduction
You may be able to deduct certain out-of-pocket expenses you paid for medical and dental care for yourself, your spouse, and your dependents (i.e., a qualifying child or a qualifying relative). As far as the IRS is concerned, medical expenses are the costs of "diagnosis, cure, mitigation, treatment, or prevention of disease."
The deduction applies only to expenses that exceed 7.5% of your income. So, if your AGI is $50,000, you can claim the deduction for medical expenses that exceed $3,750 ($50,000 × 7.5%).
Head of Household Status
In addition to the numerous tax credits and deductions, you may qualify for head of household status if you have a dependent. Taxpayers who file as heads of household have a higher standard deduction and a lower marginal tax rate than single filers—both of which can lower your taxes.
To file as head of household, all of the following statements must be true:
- You were unmarried on the last day of the year.
- You paid more than half the cost of keeping your home for the year.
- A qualifying person lived with you in the home for more than half the year (except for temporary absences). If the qualifying person is your parent, they don't need to live with you.
Can I Claim the Child Tax Credit, EITC, and the Child and Dependent Care Credit?
Yes. As long as you meet the qualifications for each credit, you can claim all three on your income tax return. All these credits phase out gradually at specific income levels.
Who Qualifies for the Child and Dependent Care Credit?
You can claim the child and dependent care credit if you paid a person or an organization to care for your dependent under the age of 13 (e.g., your child) or a dependent of any age who can't care for themselves and lives with you for at least half of the year.
What Is the Deadline for Filing My 2023 Tax Return?
Your 2023 tax return is due Monday, April 15, 2024. You can get an automatic?six-month extension?by filing?Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.
Note that this gives you an extension only for the paperwork. You still need to pay the amount you estimate you owe by the deadline.
What Is the Difference Between a Tax Credit and a Tax Deduction?
A tax credit is better than a tax deduction.
A tax credit is subtracted directly from the total of the tax you owe. A tax deduction reduces your taxable income (the amount of income on which you owe taxes).
For example, a $1,000 tax credit lowers your tax bill by $1,000. A $1,000 tax deduction reduces your taxable income by $1,000. So, if you fall into the 22% tax bracket, that $1,000 deduction would save you $220 ($1,000 × 22%).
The Bottom Line
If you can claim a dependent on your tax return, numerous tax credits and deductions could help lower your tax bill or increase your refund. It's possible to save thousands of dollars at tax time if you claim all the tax breaks to which you're entitled.
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Internal Revenue Service. “Dependents,” Page 2.
Internal Revenue Service. "IRS Provides Tax Inflation Adjustments for Tax Year 2023."
Internal Revenue Service. “Publication 504 Divorced or Separated Individuals,” Page 9.
Internal Revenue Service. "Qualifying Child Rules."
Internal Revenue Service. "Overview of the Rules for Claiming a Dependent."
Internal Revenue Service. "Gross Income Limitation for a Qualifying Relative." Page 16.
Internal Revenue Service. “Publication 504 Divorced or Separated Individuals,” Page 8.
Internal Revenue Service. “Credits and Deductions for Individuals.”
Internal Revenue Service. "Publication 17 (2022), Your Federal Income Tax."
Internal Revenue Service. "Rev. Proc. 2023-34," Page 9.
Internal Revenue Service. "What You Need to Know About CTC, ACTC and ODC."
Internal Revenue Service. "Child Tax Credit & Credit for Other Dependents," Page 24-5.
Internal Revenue Service. "Earned Income and Earned Income Tax Credit (EITC) Tables."
Internal Revenue Service. "Rev. Proc. 2022-38," Page 10.
Internal Revenue Service. "Publication 503 (2022), Child and Dependent Care Expenses."
Internal Revenue Service. "Child and Dependent Care Credit FAQs."
Internal Revenue Service. "Topic No. 456 Student Loan Interest Deduction."
Internal Revenue Service. "Publication 970: Tax Benefits for Education." Page 31.
Internal Revenue Service. "American Opportunity Tax Credit."
Internal Revenue Service. “Publication 970 Tax Benefits for Education,” Pages 51-52.
Internal Revenue Service. “Publication 502 Medical and Dental Expenses (Including the Health Coverage Tax Credit),” Page 2.
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Tax Deductions and Credits Guide
What Is Tax Relief? How It Works, Types, and Example
Tax Benefit: Definition, Types, IRS Rules
Tax Break Definition, Different Types, How to Get One
Tax Deductions That Went Away After the Tax Cuts and Jobs Act
Tax Credits That Can Get You a Refund
Nonrefundable Tax Credit: Definition, How It Works, and Benefits
Earned Income Tax Credit (EITC): Definition and How to Qualify
Saver’s Tax Credit: A Retirement Savings Incentive
Unified Tax Credit: Definition and Limits
General Business Credit (GBC): What it is, How it Works
Foreign Tax Credit: Definition, How It Works, Who Can Claim It
Dependents: Definition, Types, and Tax Credits
How Much Does a Dependent Reduce Your Taxes?
Child and Dependent Care Credit: Meaning, Overview, FAQs
Child Tax Credit Definition: How It Works and How to Claim It
Additional Child Tax Credit (ACTC): Definition and Who Qualifies
What Was the Hope Credit? How It Worked and Replacement
American Opportunity Tax Credit (AOTC): Definition and Benefits
Tax Deduction Definition: Standard or Itemized?
Itemized Deductions: What It Means and How to Claim
Tax-Deductible Interest: Definition and Types That Qualify
Charitable Contribution Deduction: Tax Years 2023 and 2024
20 Medical Expenses You Didn’t Know You Could Deduct
Educator Expense Deduction: What It Means, How It Works, Limits
Top Tax Advantages of Buying a Home
Calculating the Home Mortgage Interest Deduction (HMID)
Tax Breaks for Second-Home Owners
Rental Property Tax Deductions
Getting U.S. Tax Deductions on Foreign Real Estate
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IRA Contributions: Deductions and Tax Credits