If you have family, they could help you qualify for some tax deductions. Majority of taxpayers are aware that they are able to take personal exemptions for their children yet they fail to realize that they may be able to take exemptions for their parents and other relatives.
By not doing so, you are missing a chance to reduce your taxes. Each dependent could allow you to deduct $3,900 from your federal taxable income and if you have dependent children, the child tax credit could get you an additional $1000.
Children You Support
If you support a child, they are considered a qualifying child even if they are not your biological child. They just have to be related to you in some way, including adopted children. Additionally, the child has to be under 19 years of age, except in the event that they are disabled. Furthermore, if they are under 24 years of age and are considered a full time student, you can claim them too.
The child has to be a dependent, which means that they reside with you unless they are away at school. They also have to be a US citizen during the year and have a valid social security number for you to put on your tax return.
Relatives You Support
If you support your parents or uncles you may be able to claim a dependency exemption if they meet the following requirements.
- They are a relative or member of your household – this means they are a child or descendent of your child. Alternatively, they could be a sibling, parent, or grandparent. Lastly, they could be an aunt, uncle, or in-law.
- Their taxable income is less than $3,900 (Keep in mind this number increases each year).
- You pay for more than half of their support. In the event that more than one person pays for his or her support, everyone has to agree that you will claim the exemption.
If you file your taxes with TurboTax, finding out whom you can claim will be easier. They will ask you some simple questions so you can see who qualifies as a dependent. Additionally, when filing with Turbo Tax they make sure that you get the largest tax refund possible so you can keep the maximum amount of your hard-earned money in your pocket where it belongs.