Tax Deductions and Credits for Your Dependents

Claiming a dependent on your annual tax return can lower your overall tax liability. The Internal Revenue Service (IRS) provides these tax benefits to recognize the financial costs of supporting another person. The tax code has specific criteria to determine who qualifies as a dependent, and meeting these requirements unlocks various credits and deductions.

Defining a Qualifying Dependent

A person can be claimed as a dependent if they are considered either a “Qualifying Child” or a “Qualifying Relative.” An individual must satisfy all the requirements for one of these categories to be claimed. As a general rule, you cannot claim someone as a dependent if they are married and file a joint tax return, unless they are only filing to get a refund of taxes withheld.

Qualifying Child

To be claimed as a qualifying child, an individual must meet five tests: relationship, age, residency, support, and joint return. The relationship test requires the child to be your son, daughter, stepchild, foster child, brother, sister, half-brother, half-sister, stepbrother, stepsister, or a descendant of any of them. An adopted child is always treated as your own child for tax purposes.

The age test stipulates that the child must be under age 19 at the end of the tax year and younger than you, or under age 24 if they are a full-time student for at least five months of the year and younger than you. There is no age limit if the individual is permanently and totally disabled.

The residency test mandates that the child must have lived with you for more than half of the year. Temporary absences for school, vacation, or medical care are excused. The support test for a qualifying child requires that the child did not provide more than half of their own financial support for the year.

Qualifying Relative

If an individual does not meet the criteria to be a qualifying child, they may still be claimed as a dependent under the qualifying relative rules. This category has four tests: the not a qualifying child test, the member of household or relationship test, the gross income test, and the support test. The person cannot be your qualifying child or the qualifying child of any other taxpayer.

The second test requires the person to either live with you as a member of your household for the entire year or be related to you. Relatives such as parents, grandparents, in-laws, uncles, and aunts do not need to live with you to meet this test. The gross income test requires that the individual’s gross income for the year must be less than $5,200 for tax year 2025.

The final test is the support test, which is different from the one for a qualifying child. For a qualifying relative, you must have provided more than half of the person’s total support for the year. When a child could be a qualifying child for more than one person, IRS “tie-breaker” rules state that the parent with whom the child lived longer during the year gets to claim the dependent.

Associated Tax Credits and Deductions

Claiming a dependent allows access to several tax benefits that reduce the amount of tax owed. The specific benefits available depend on the dependent’s age, your relationship to them, and your income level.

• The Child Tax Credit (CTC) is for taxpayers who claim a qualifying child under the age of 17. The credit can be worth up to $2,000 per child, with up to $1,700 of it being potentially refundable. The credit amount begins to phase out for taxpayers with higher incomes.
• The Credit for Other Dependents (ODC) is a nonrefundable credit valued at up to $500 for each eligible dependent. This includes qualifying children who are age 17 or older, as well as qualifying relatives of any age. Like the CTC, the ODC is subject to income limitations.
• The Child and Dependent Care Credit helps taxpayers who pay for care for a qualifying person so they can work or look for work. A qualifying person is a child under 13 or a dependent of any age who is incapable of self-care. The credit is a percentage of work-related expenses, up to $3,000 for one person or $6,000 for two or more.
• Claiming a dependent can make a taxpayer eligible for the Head of Household filing status, which offers a higher standard deduction and more favorable tax brackets than the Single status. You must be unmarried, pay for more than half the costs of keeping up a home, and have a qualifying person live with them for more than half the year.
• You may be able to deduct medical expenses you paid for a dependent, even if that dependent cannot be claimed for other tax benefits due to the gross income test.

Information and Documentation for Filing

You must have the dependent’s personal information before filing your tax return. This includes the dependent’s full name exactly as it appears on their Social Security card, their date of birth, and their valid Social Security Number (SSN). If your dependent is not eligible for an SSN, you may need to obtain an Individual Taxpayer Identification Number (ITIN) or an Adoption Taxpayer Identification Number (ATIN).

For divorced or separated parents, Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, is an important document. The custodial parent—the parent with whom the child lived for the greater part of the year—must sign this form to allow the noncustodial parent to claim the child as a dependent. The noncustodial parent must attach the completed form to their tax return for the claim to be allowed.

Claiming a Dependent on Your Tax Return

After confirming eligibility and gathering documents, you report the dependent on your Form 1040, the U.S. Individual Income Tax Return. In the “Dependents” section, you must enter the individual’s full name, Social Security Number, and their relationship to you.

You must also check the appropriate box to indicate whether the dependent qualifies for the Child Tax Credit or the Credit for Other Dependents. This selection tells the IRS which credit you are intending to claim for that specific individual, which then flows to the relevant credit calculation forms or schedules.