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Claiming dependents on your taxes can lead to significant savings, but the rules can be confusing, especially when it comes to adult children. Many taxpayers are unsure whether they can still claim their adult children as dependents, particularly after recent tax reforms eliminated the dependentexemption. Although the exemption is gone, there are still valuable tax credits available for dependents, and understanding who qualifies can make a big difference in your tax bill.

The key to determining whether you can claim your adult child lies in understanding the definitions of “qualifying child” and “qualifying relative.” These categories are crucial because they help determine eligibility for various tax credits, including the Child Tax Credit and the Other Dependent Credit.

Understanding Qualifying Child vs. Qualifying Relative

To claim someone as a dependent, they must either be a qualifying child or a qualifying relative, each with specific criteria.

A qualifying child must be related to you, typically as a son, daughter, or a close family member. The child must also be under 19 years of age or under 24 if they are a full-time student. If your child is permanently and totally disabled, there is no age limit. Additionally, the child must have lived with you for more than half the year and must not have provided more than half of their own financial support.

A qualifying relative doesn’t need to be your biological child and can include many other types of relationships, including elderly parents, in-laws and even non-relatives who live with you. The critical factors for a qualifying relative are that they must have earned less than $5,050 in gross income for the tax year 2024, and you must have provided more than half of their financial support during the year.

The $500 Credit for Other Dependents

Even though you can no longer claim a dependent exemption, the IRS offers the $500 Credit for Other Dependents, also known as the Family Tax Credit. This credit applies to dependents who don’t qualify for the Child Tax Credit, such as children over the age of 17 or other adult dependents. To be eligible for this credit, the person must meet the criteria for either a qualifying child or a qualifying relative.

This credit can be particularly beneficial if you’re supporting an adult child or an aging parent who doesn’t meet the stricter criteria for the Child Tax Credit. However, keep in mind that this credit begins to phase out once your adjusted gross income exceeds $200,000 ($400,000 if you’re married and filing jointly), reducing by $50 for every $1,000 above these thresholds. To qualify for the $500 credit, your adult child must meet the criteria for a "qualifying relative.”

Special Considerations for Adult Children

When it comes to adult children, the situation can get more complex. If your child is married and files a joint return with their spouse, you generally cannot claim them as a dependent unless the only reason they filed jointly was to claim a refund. Moreover, if your adult child has their own income and covers more than half of their own expenses, they no longer qualify as your dependent.

However, there are scenarios where you might still be able to claim your adult child. For instance, if your child is a full-time student under the age of 24 and you provide more than half of their support, they may still qualify as a dependent. Additionally, if your child is permanently disabled, the age restriction does not apply, and you may continue to claim them as a dependent indefinitely.

Last Word

Claiming an adult child as a dependent on your taxes can provide valuable tax benefits, but the rules are complex and depend on various factors, including their age, income and living situation. Understanding the distinctions between a qualifying child and a qualifying relative is crucial in making the right decisions for your tax return.