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Claiming Dependents & Tax Debt

Your young child may be a dependent that you can claim on your tax return. But determining the status of dependents other than your own children is not always easy. Moreover, incorrectly claiming a person as a dependent can ultimately create a tax debt.

What Qualifies as a Dependent?

You can claim a child as a dependent if:

Relationship Test: The child is yours by birth, adoption, or has been placed under your care as a foster child. If the adoption process is underway and the child is living with you, you can make the claim. Your dependent sibling, stepsibling, or a descendant of these family members (nephew, niece, grandchild) can also be claimed.

Residency Test: The child lives with you for more than 6 months in a year. If a child went on a long vacation, for medical treatment, studies, etc., the child is still considered to be living with you.

Age Test: The child is younger than 19 at the end of the tax year. If the young person is a full-time student (or at least five months in a year), the age limit is 24 and under. There is no age limit if the child is permanently and totally disabled.

Citizen or Resident Test: The child is a U.S. citizen, a U.S. national, or is a resident of the United States, Canada, or Mexico for some part of the year.

Support Test: A child can only qualify if he or she does not bear more than half of his or her own support costs during a year.

You can bring down your tax bill each year if you claim a child living with you as a dependent. The dependency exemption for 2014 was $3,950.

To get the exemption, you need to list the qualifying child’s social security number on your tax return. To get the social security number for the child, fill out and file Form SS-5, Application for a Social Security Card. Including the social security number of the child prevents people from claiming non-existent children as dependents.

If another person is claiming the child as a dependent on his or her tax return, then you cannot make the same claim on your return. Erroneously claiming a person as your dependent can lead to back taxes.

If a claim error is made, the IRS sends a notice informing the taxpayer of any potential liability. Delay in resolving this discrepancy can lead to penalties and interest.