A dependent is someone whom a taxpayer can claim on their income tax return. Typically, you may claim yourself unless you are the dependent of another taxpayer, your spouse (unless he or she files separately), and your children. You may claim also your parent(s) or qualifying relatives as dependents.
The qualified child must have a relationship with you in one of the following ways:
If they are a full-time student, they must be under the age of 24 as of the end of the year or regardless if they are students, they must be under the age of 19 as of the end of the year. Their place of residence should be the same of the taxpayer’s for more than one-half of that year. Lastly, the child must not provide more than one-half of their own support.
The qualified parent or relative must have gross taxable income less than $3,950 in that year to even qualify as a dependent (as of 2014). Next, the qualified parent or relative also must be a U.S. citizen and you can be the only one claiming them as a dependent. For families with multiple siblings supporting their parent, this is something that should be coordinated well in advance of the filing deadline. Lastly, you cannot claim a parent or relative who is married and files a joint tax return.
The importance of knowing who you can claim as a dependent on your income tax return will allow you to benefit from an accurate number of exemptions. Specifically, for every qualified dependent you claim, you have the ability to reduce your taxable income up to the exemption amount for that stated year. The personal exemption amount is $3,950 in 2014, up from $3,900 in 2013.
However, there are phase-outs for personal exemptions that are worth noting. Phase-outs for personal exemption amounts begin with adjusted gross incomes of $254,200 and phase out entirely at $375,700 for individuals in 2014. For joint filers the phase-out begins at $305,050 and phases out entirely at $427,550 in 2014.