What Does Tax Code 152 Mean for Claiming a Dependent?

Tax Code 152 establishes the framework for determining who can be claimed as a “dependent” for tax purposes. This foundational tax law outlines specific criteria individuals must meet to qualify, impacting various tax benefits. Understanding these definitions is important for taxpayers aiming to accurately file their returns and potentially reduce their tax liability.

Defining a Qualifying Child

An individual can be considered a “qualifying child” if they meet several specific criteria. 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 these individuals. The age test specifies the child must be under age 19 at the end of the tax year, or under age 24 if a full-time student.

The residency test mandates that the child must have lived with you for more than half of the year. The support test ensures the child did not provide more than half of their own financial support for the year. The joint return test states the child cannot file a joint tax return for the year.

Defining a Qualifying Relative

An individual may also qualify as a “qualifying relative” under different criteria. This category applies if the person is not a qualifying child of any taxpayer. The member of household or relationship test requires the individual to either live with the taxpayer all year as a member of their household, or be related to the taxpayer in specific ways, such as a parent, grandparent, sibling, or certain in-laws. The gross income test stipulates that the individual’s gross income for the tax year must be less than $5,050. Certain types of income, like some Social Security benefits, may be excluded from this calculation. The support test mandates that the taxpayer must provide more than half of the individual’s total financial support for the year.

How Dependents Affect Your Taxes

Claiming a qualifying child or qualifying relative can enable access to several tax benefits, even though the personal dependency exemption was suspended. For instance, a qualifying child may make a taxpayer eligible for the Child Tax Credit, which can be up to $2,000 per qualifying child under age 17 for 2024, with a refundable portion known as the Additional Child Tax Credit. A qualifying relative or an older qualifying child might qualify for the Credit for Other Dependents, offering up to $500 per dependent. The Earned Income Tax Credit (EITC) can also be significantly impacted by a qualifying child, potentially increasing the credit amount for eligible low-to-moderate income taxpayers. Additionally, having a qualifying dependent can allow a taxpayer to file using the Head of Household status, which typically offers a higher standard deduction and more favorable tax rates than filing as a single individual. These benefits highlight the financial implications of meeting the dependency rules.