If you’re financially supporting a dependent who doesn’t qualify for the Child Tax Credit, you may still be eligible for a $500 tax break through the Credit for Other Dependents. This often-overlooked credit can help reduce your tax bill, whether you’re supporting an elderly parent, a relative, or even a domestic partner. LifeMySavings is here to guide you through the eligibility criteria and claiming process—ensuring you don’t miss out on valuable savings!
What is the credit for other dependents?
The Credit for Other Dependents offers a $500 non-refundable tax break for those supporting dependents who don’t qualify for the Child Tax Credit. This credit can be claimed alongside other tax benefits, such as the Child and Dependent Care Credit and the Earned Income Credit, helping taxpayers maximize their savings.
If you’re filing your 2023 tax return, understanding this credit can help you determine whether you’re eligible and how to make the most of your tax benefits.
For tax purposes, a dependent is anyone other than yourself or your spouse who qualifies to be claimed on your tax return. In simple terms, a dependent is someone who relies on you for financial support. This typically includes children and close relatives, but in some cases, it can also extend to non-relatives, such as a domestic partner, if they meet specific criteria.
By claiming a dependent on your tax return, you’re officially notifying the IRS that you meet the necessary requirements. This can open the door to valuable tax credits and deductions, potentially reducing your overall tax burden.
Why Should You Claim a Dependent?
Claiming a dependent can save you thousands on your taxes by unlocking valuable credits and deductions. While personal exemptions were eliminated in 2018, new benefits have replaced them, including:
- Child Tax Credit – Up to $2,000 per child
- Additional Child Tax Credit – Up to $1,700 per child
- Credit for Other Dependents – Up to $500 per qualifying dependent
- Dependents also help you qualify for the Earned Income Tax Credit, Child and Dependent Care Credit, and medical expense deductions.
Who Qualifies as a Dependent?
The IRS sets clear rules for determining who qualifies as a dependent, covering various family situations. Luckily, for most people, the basic guidelines apply.
There are two main types of dependents, each with specific requirements:
Qualifying Child
Qualifying Relative
To claim either type, you’ll need to answer a few key questions.
- Are they a U.S. citizen or resident?: The dependent must be a U.S. citizen, U.S. national, or a resident of the U.S., Canada, or Mexico. Foreign exchange students may qualify, but only if they meet these residency requirements. Adopted children may have exceptions.
- Is anyone else claiming them?: A dependent cannot be claimed on multiple tax returns. If they file their own return and claim a personal exemption, they also cannot be claimed. Special tie-breaker rules apply for children of divorced parents (see IRS Publication 501).
- Are they filing a joint return?: You generally cannot claim a married dependent who files a joint tax return unless it’s only to claim a refund of withheld income tax or estimated taxes.
Claiming dependents can unlock valuable tax credits and deductions, helping to lower your tax bill significantly.
Qualifying Child Requirements
To claim a qualifying child, you must meet all of the following conditions:
- Are they related to you? The child must be your biological, step, or adopted child, an eligible foster child, or a sibling (including half-siblings and step-siblings). Their descendants, such as grandchildren, also qualify.
- Do they live with you? The child must live with you for more than half the year, though exceptions exist for temporary absences (e.g., college, military service).
- Do they meet the age requirement? The child must be under 19 (or under 24 if a full-time student). There is no age limit if they are permanently and totally disabled.
- Do you financially support them? The child cannot provide more than half of their own financial support, even if they have a job.
Qualifying Relative Requirements
Many people support aging parents or other relatives, but providing some financial help doesn’t automatically mean you can claim them. Here’s how to determine if they qualify:
- Do they live with you? The relative must live with you all year unless they are on the IRS’s list of qualifying relatives (e.g., parents, in-laws, grandparents, aunts, and uncles).
- Do you provide most of their financial support? You must cover more than half of their total yearly support, including expenses like housing, food, and medical care.
- Do they meet the income limit? In 2024, the relative’s gross income must be below $5,050 ($5,200 in 2025). Some income, such as certain Social Security benefits, may be excluded.
Check Eligibility for the Credit for Other Dependents
The Credit for Other Dependents is a $500 non-refundable tax credit for those who financially support dependents who don’t qualify for the Child Tax Credit.
The Credit for Other Dependents starts to phase out for higher-income taxpayers:
- Begins to decrease at $200,000 for single filers.
- Phases out at $400,000 for married couples filing jointly.
To claim the Credit for Other Dependents, you must:
- List the person as a dependent on your tax return.
- Ensure they do not qualify for the Child Tax Credit or Additional Child Tax Credit.
Real-Life Examples of Claiming Dependents
The Credit for Other Dependents can provide a valuable tax break if you financially support dependents who don’t qualify for the Child Tax Credit. Below are common situations where you may be eligible to claim this $500 non-refundable credit.
Divorced Parents with Custody Agreements
For divorced parents, determining who can claim the Credit for Other Dependents depends on custody arrangements. Generally, the parent with whom the children live more than half the year can claim them as dependents. However, if the other parent has a legal agreement allowing them to claim the child, they may qualify for the Credit for Other Dependents instead.
Married Filers with Two Minor Children
If you and your spouse file jointly and have two minor children, you can typically claim them as dependents. Since they don’t earn income and live with you for more than half the year, they qualify as dependent children. However, if they don’t meet Child Tax Credit requirements, you may still be able to claim the Credit for Other Dependents.
Claiming a Domestic Partner
You may be able to claim your domestic partner as a dependent if they meet the qualifying relative criteria. To qualify for the Credit for Other Dependents, your partner must earn below a certain income threshold, and you must provide more than half of their financial support throughout the year.
Supporting an Elderly Parent with Siblings
If you and your siblings financially support an elderly parent, only one of you can claim them as a dependent. The general rule is that the person providing more than 50% of their support qualifies. However, under a multiple support agreement, a sibling who contributes at least 10% may still be eligible to claim the Credit for Other Dependents.
Tax Deductions & Credits for Dependents
Claiming dependents on your tax return can unlock valuable benefits, reducing your tax bill and increasing your refund. Key tax breaks include:
- Earned Income Tax Credit (EITC) – Up to $7,830 for low-to-moderate-income families in 2024.
- Child and Dependent Care Credit – Covers 20%-50% of up to $6,000 in childcare expenses.
- Child Tax Credit (CTC) – Up to $2,000 per qualifying child under 17.
- Credit for Other Dependents – A $500 non-refundable credit for qualifying relatives.
- Adoption Credit – Up to $16,810 for adoption-related expenses.
- Medical Expense Deduction – Deduct medical costs exceeding 7.5% of your AGI.
- Education Credits (AOTC & LLC) – Up to $2,500 for tuition and qualified expenses.
How to Claim a Dependent on Your Taxes
Claiming a dependent on your tax return is simple, but it’s important to follow the correct steps to ensure eligibility. You’ll need Form 1040 and key details about your dependent, including their full name, age, and Social Security number.
Steps to Claim a Dependent
- Enter their full name on the first page of Form 1040.
- Provide their Social Security number as required.
- Indicate their relationship to you (e.g., child, relative, or qualifying individual).
- If you have more than four dependents, check the designated box and attach a separate page with their details.
IRS Requirements for Dependents: To qualify as a dependent, the individual must generally:
- Be under 19 years old (or under 24 if a full-time student).
- Live with you for more than half the year.
- Not provide more than half of their own financial support.
FAQs on Claiming Dependents
Understanding the rules for claiming dependents can help you maximize your tax benefits. Here are answers to some common questions.
How Much Can a Dependent Child Earn?
A qualifying child can earn any amount of money and still be claimed as a dependent—as long as they don’t provide more than half of their own financial support.
However, if you’re claiming the child under the qualifying relative rules, their gross income must be below $5,050 for the 2024 tax year. This limit increases to $5,200 in 2025.
Can You Claim Adults as Dependents?
Yes, you can claim adult dependents, such as elderly parents or domestic partners, if they meet the qualifying relative criteria.
The main challenge when claiming an adult as a dependent is the income limit. For 2024, their gross income must be below $5,050 (increasing to $5,200 in 2025). If they meet this requirement and you provide more than half of their financial support, you can claim them—potentially unlocking valuable tax deductions and credits.
When Should I Stop Claiming My Child as a Dependent?
You may no longer be able to claim your child as a dependent if:
They turn 19 (or 24 if a full-time student), unless they have a disability.
They start providing more than half of their own financial support.
They move out and no longer live with you for more than half the year.
If your child no longer qualifies under the qualifying child rules, you may still be able to claim them as a qualifying relative, depending on their income and financial support situation.
Claiming the Credit for Other Dependents can put extra money back in your pocket during tax season. Whether you’re caring for a family member or another qualifying dependent, this credit can make a difference.
