Member of the household (or relationship)
The person must live with you for the entire year as a member of your household or must
be related to you as a parent, sibling, child, grandchild, aunt or uncle, niece or nephew,
or in-law. A foster child must live with you as a member of the household for the entire
year to qualify as a dependent.
Any person you claim as a dependent must be either a US citizen or a resident
of the US, Canada or Mexico for at least some part of the calendar year.
Foreign exchange students typically would not qualify as dependents because they
are neither citizens nor residents of the US. However, if you are
providing sole support for your parents residing in Mexico, they would qualify
Unless the individual you are wanting to claim as a dependent is your
child and under age 19 (or 24 in the case of a student), he or she cannot
earn more than $3,950 (in 2015) during the year. Unfortunately, the
IRS considers gross income to be all money, property and services received
which are not tax exempt and is considered regardless of offsetting
So, for example, using the case of your mother-in-law above, if she comes
to live with you as her sole means of support, but leases out her condo at
$400 per month, you most likely will not be able to claim her as your
dependent. Her gross income for the year will be $4,800 regardless of
the expenses she incurs maintaining the condo for her lessee.
On the brighter side, however, since her social security payments are
most likely exempt from tax, that income would not be considered as part of
her gross income. If she sells the condo, you may be able to claim her
as a dependent regardless of her social security income.
Even if all other tests are met, you cannot take a dependent exemption
for an individual who files a joint return in most cases. Even if you
provide all of the support for your mother-in-law using the case above as an
example once more, and she has no other income, but files a joint return
with her spouse, you would be prohibited from listing her as a dependent.
Generally, you must provide more than half the support (which includes
food, clothing, housing, medical and education and other costs) for any person you
plan to claim as a dependent during the calendar year. Your percentage
of support can be determined by comparing it to the support the individual
received from all other sources.
In the instance when no one provides more than half the support for a person
(several children supporting an aged parent for example), but the person would
qualify as a dependent on all other tests, then anyone who provides more than
10% of the support can claim the exemption provided an agreement is reached with
the other parties providing support. Only one person, however can claim
the exemption and the others must sign a written statement agreeing not to claim
the exemption. The written statement must be attached to the return of the
person claiming the dependent.
Divorced or separated parents have a special set of rules for determining dependent
deduction. But generally, the parent who has custody of the child for the greater
part of the year is treated as the parent who provides more than half of the child's
This is true whether or not the custodial parent actually provided more
than half the support. A custodial parent may sign a statement promising not to claim the exemption for the
child. It should be attached to the tax return of the noncustodial parent claiming
Please give us a call is you have questions regarding a potential
dependent. In "close" situations, there is some tax planning
that you can do in this area.