At first glance, this may seem like an odd question – something like asking whether you can take yourself to the movies. But up until the end of 2017, you could, in a sense, claim yourself as a dependent. What I mean by that is that the tax code allowed for taxpayers to claim a “personal exemption” for themselves and other eligible members of their household. The amount of the personal exemption was adjusted each year for inflation and, for the 2017 tax year, it was set at $4,050.
Let us say your income in 2017 from your job as a retail clerk was $50,000 and you filed your tax return as a single taxpayer. Regardless of whether you itemized your deductions or took the standard deduction at that time of $6,350 for a single taxpayer, you also could deduct $4,050 from your gross income as a personal exemption for yourself. After taking these deductions, you would then arrive at your taxable income figure and calculate the tax payable on this amount. If you took only the standard deduction and had no other available deductions, your taxable income would have been $39,600 ($50,000 – $6,350 – $4,050).
On the other hand, if you had been married with 3 dependent children, the impact of the personal exemption in 2017 would have been much more dramatic because your family was eligible for 5 personal exemptions (5 x $4,050 = $20,250). Together with the standard deduction of $12,700, the result of your taxable income would have been $17,250 ($50,000 – $12,700 - $20,050).
But beginning with the 2018 tax year, the Tax Cuts and Jobs Act (TCJA) introduced major changes to the tax code. These changes included reducing the personal exemption amount to zero and almost doubling the amount of the standard deduction. For example, the standard deduction for a single taxpayer was increased to $12,000 for 2018. These and most of the other changes made by the TCJA legislation were designed to be in effect from the beginning of the 2018 tax year until the end of the 2025 tax year. Presently, it remains unknown whether Congress will decide to extend these changes beyond 2025.
Although we have just seen that you cannot claim a personal exemption for yourself for the time being, the matter of whether or not someone else can claim you as a dependent is still quite relevant. But before going further, let us define what the qualifications are to be a dependent for tax purposes.
A taxpayer’s dependent can be either their qualifying child or a qualifying relative and must be either a U.S. citizen, U.S. national, U.S. resident alien, or a resident of Canada or Mexico. More information can be found here on the IRS website, but here is a brief summary for dependents:
A qualifying child is a taxpayer’s son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of any of them. The person claimed must have lived with the taxpayer for more than half the year and be younger than 19 (or younger than 24 if a full-time student) at the end of the year. Also, the person must not have provided more than half of the cost of their own support for the year.
A qualifying relative may be any age but cannot be someone who meets the definition of a qualifying child. In addition to the relationships listed above, the person can be the taxpayer’s father, mother, or an ancestor or sibling of either of them; or their stepfather, stepmother, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. In fact, it can be any other person (other than the taxpayer’s spouse) who lived with the taxpayer all year as a member of the household so long as the relationship did not violate local law. And the taxpayer must have provided more than half of that person’s support for the year.
When completing your tax return, it is important to know:
- Whether you qualify to be claimed as a dependent on someone else’s return, and
- If so, whether or not that person intends to claim you as a dependent.
For example, the tax code allows your parents to claim tax credits related to the amounts they have paid during the year for your college education. However, they can only receive these benefits if you are claimed as a dependent on their tax return, and their income is below $180,000 on their joint return. But if their income is above this threshold, they can choose not to claim you as a dependent, and this will allow you to claim the education tax credit benefits on your own return.
In a case such as this, you should make sure to coordinate with your parents prior to you filing your tax returns to ensure that the education tax credit is not lost. Checking with your parents will also avoid the potential problems and delayed refunds caused by both you and your parents claiming the same credit in the same year. There are also other tax benefits, such as the Earned Income Credit, for which your eligibility depends on whether or not you qualify as the dependent of another person.
Coming back to our original question, the bottom line is that although you cannot claim yourself as a dependent, it can be very helpful for you find out who actually
can claim you as a dependent and whether or not they intend to do so.