Year after year, we get questions on who can be claimed as a dependent on an income tax return. For some taxpayer’s the answer is easy, and for others, it can take a list of questions and answers to determine if the dependent is eligible for that taxpayer to claim.

Two Main Credits for Claiming Dependents

There are two main credits for qualifying dependents for a taxpayer to claim on an individual tax return – [1] Child Tax Credit, and [2] Other Dependent Credit. To determine the eligibility of claiming a dependent and the type of credits the dependent may allow you to qualify for, the following questions would need to be answered.

  • What is the dependent’s relationship to the taxpayer?
  • How many months did the dependent live with the taxpayer?
  • Did the dependent provide more than half of their support during the year?
  • Did you, the taxpayer, provide more than half of the support for the dependent during the year?
  • What is the dependent’s age?
  • What was the amount of income the dependent earned during the year?

Here is a link to a great IRS tool that can help you determine if you can claim a dependent: https://www.irs.gov/help/ita/whom-may-i-claim-as-a-dependent

Here are some main differences between the Child Tax Credit and Other Dependent Credit:

Is the Credit Refundable?
Child Tax Credit: Yes, it can be.
Other Dependent Credit: No.

How much is the maximum possible credit for tax filing year 2021?

Child Tax Credit:
Children under 6 yrs old up to $3,600
Children ages 6-17 yrs old up to $3,000

Other Dependent Credit
$500 for Qualifying children 18-23 yrs old
$500 any age

The amounts of the Child Tax Credit and Other Dependent Credit are for tax filing 2021. New to 2021 is Advanced Child Tax Credit payments, which started July 15th for those tax-qualified and who didn’t opt-out.

It is important that if you receive Advanced Child Tax Credit payments in 2021 that you must report the amount received when filing your 2021 income tax return. This will help you reconcile the remaining Child Tax Credit you can claim on your income tax return.

No Longer Claiming Dependents?

In some instances, if you are no longer claiming the dependent on your 2021 income tax return and received Advanced Child Tax Credit payments, you may have to return some or all of the advance payments back to the IRS.

Taxes can be complicated and are ever-changing. Abacus is here to help. Contact us at 417.380.5000 for any tax related questions you may have.

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