What You Need to Know About Claiming Your Dependent Relative

Taking care of an aging parent or relative can be hard, not to mention expensive. The good news is that you may be able to claim them on your tax return and get a bigger refund.

Supporting a relative can impact many areas of your life.  The most obvious are the changes to your living situation, amount of free time you have, and your finances.

To help relieve the financial strain of caring for a relative, you can report these relatives as dependents on your tax return. Doing so can save you thousands of dollars in taxes, because for every qualified dependent you claim your taxable income is reduced by $3,950.

Your dependent will belong to either one of the two following categories:

  • qualifying child 
  • qualifying relative

To learn more about claiming a qualifying child, refer to this RapidTax post.

Who Can I Claim as a Qualifying Relative Dependent?

The term “relative” may be unclear. For example, is your cousin’s wife considered your relative? How about his ex-wife?

Truth is, the IRS uses the term loosely. Despite what it implies, a Qualifying Relative does not necessarily have to be related to you.  In fact, a girlfriend, boyfriend  or even a housemate can qualify as a “relative” as long as he or she meets the IRS rules.

In order to claim someone as your qualifying relative, he or she must:

  • Have lived with you all year (as a member of your household), or be one of the 30 individuals listed as a “relative” on the IRS Publication 501.

(according to this list, a parent, sibling, stepparent, stepchild, stepsibling, half sibling, grandparent, grandchild, child-in-law, parent-in-law, sibling-in-law, uncle, aunt, niece, nephew can be claimed)

  • Be a U.S. citizen or U.S. resident, or a resident of Canada or Mexico

  • Be unmarried, or married but not filing a joint return

  • Not being claimed as a qualifying child by someone else

  • Have a gross income of less than $3,950

  • Have not provided more than half of his or her own support

What if my relative doesn’t live with me?

Even though you did not live in the same household as a relative that you cared for (such as an elderly parent), you may still be able to claim them as a dependent on your tax return. 

As long as you meet all of the criteria outlined above, the relative can be claimed as your dependent. 

How do I claim my dependent relative using RapidTax?

To claim a dependent relative using RapidTax, follow these steps:

  1. Create an account

  2. Enter your basic information including your name, date of birth, address, etc.

  3. You’ll have the option to add a dependent. Opt to do so.

  4. Enter the dependent’s basic information, including:

  • date of birth
  • relationship to you
  • social security number
  • the number of months he or she lived with you
  • income earned
  1. Click the green “Save & Go” button.

After entering your dependent’s information, you’ll have the option to add additional dependents before moving onto the rest of the tax application. We’ll do the rest and make sure your deduction adds to your refund.

Are you ready to e-file your 2014 Tax Return? Let’s get started.

Photo via Joonas Tikkanen on Flickr

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