Dependents - In Summary

We need to always take care to pay attention to the details, but there are times when we need to be familiar with subjects at the summary level as well.  Dependents in summary (or big picture) can help us prepare to sit for the Registered Tax Return Preparer competency exam.

The biggest picture.  To claim someone else as a dependent, they must be either a 1) qualifying child, or 2) qualifying relative.  We first try to determine if they are a qualifying child, and then, if not, we determine if they are a qualifying relative.  Remember that to be a dependent they must be one or the other; there is no "other" category.  The rules for both are different, so look at the tests for qualifying child, and then clear the memory bank and look at the tests for qualifying relative.  It is easy to mix up the tests, so discipline is required.

There are five specific tests to be a qualifying child: 1) relationship, 2) residency, 3) age, 4) qualifying child support test, and 5) joint return test (after 2008).  Additionally, taxpayer themselves cannot be a dependent of another taxpayer, and they must be a U.S. citizen or resident of U.S., Mexico, or Canada. 

There are four specific tests to be a qualifying relative: 1) relationship or full-year residency, 2) gross income test, 3) qualifying relative support test, and 4) taxpayer not a qualifying child.  Additionally, taxpayer themselves cannot be a dependent of another taxpayer, and they must be a U.S. citizen or resident of U.S., Mexico, or Canada.  The joint return test also applies.

We here at Tax Preparer Learning Systems wish you the best of luck as you navigate the new IRS regulations, and the upcoming test in particular.  Additional information is available at http://www.taxpreparerlearningsystems.com/.