Dependent

AAA

DEFINITION of 'Dependent'

An individual whom a taxpayer can claim for credits and/or exemptions. A dependent is an individual, such as a qualifying child, whom a taxpayer can claim on his or her federal and some state income tax returns. Taxpayers can reduce their taxable income by claiming deductions, which can result in a decrease in tax liabilities and an increase in the amount of a refund. Taxpayers are permitted one exemption for each person that can be claimed as a dependent. If the taxpayer's adjusted gross income falls above a certain amount as determined by the Internal Revenue Service (IRS), the dollar amount of the exemptions may be reduced.

INVESTOPEDIA EXPLAINS 'Dependent'

In general, a taxpayer can claim a dependent if the person is a qualifying child or a qualifying relative. To claim a child as a dependent, for example, the child must be the taxpayer's child, stepchild, foster child, sibling, stepsibling or a descendant of one of these individuals. In addition, the child must have the same principal residence as the taxpayer for at least half of the year for which the child will be claimed as a dependent. The child must be under age 19 at the end of the tax year (December 31) or under age 24 if he or she is a full-time student for at least five months during that year, or if the child is permanently and totally disabled at any point during the year. A dependent can be claimed on only one person's income tax return, and returns will be audited where two or more taxpayers claim the same dependent.

RELATED TERMS
  1. Support Test

    One of five tests that must be passed in order to claim someone ...
  2. Adoption Credit

    A federal tax credit that may be claimed by federal taxpayers ...
  3. Child Tax Credit

    A credit given to taxpayers for each dependent child that is ...
  4. Head Of Household

    A status held by the person in a household who is running the ...
  5. Exemption

    A deduction allowed by law to reduce the amount of income that ...
  6. Exempt Income

    Certain types or amounts of income not subject to federal income ...
Related Articles
  1. Retirement

    Are Social Security survivor benefits for children considered taxable income?

    Learn why receiving Social Security survivor benefits on behalf of children does not affect income tax for a surviving parent or guardian.
  2. Savings

    Don't Forget The Kids: Save For Their Education And Retirement

    Retirement and education financing are the two most important planning items for taxpayers.
  3. Insurance

    How Much Life Insurance Should You Carry?

    Learn how much - if any - insurance you really need.
  4. Taxes

    Taxing Times For Divorced Parents

    Find out how to deal with the tax issues that arise for divorced parents with dependent children.
  5. Taxes

    How To Claim A Dependent On Your Tax Return

    If you are a caregiver, get to know the rules for claiming a dependent before filing your taxes.
  6. Budgeting

    Kids Or Cash: The Modern Marriage Dilemma

    It now costs nearly $300,000 to raise a child for 18 years. Are you sure you're up for it?
  7. Retirement

    When am I not required to submit a social security number on my tax return?

    When filing your tax return, you are generally required to include the social security numbers of yourself and the individuals for whom you claim as dependents. However, exceptions do apply. ...
  8. Investing Basics

    Are arm's length transactions always better than transactions not at arm's length?

    Transactions not at arm's length have real tax and other consequences for individuals and businesses, but they are not necessarily always worse.
  9. Taxes

    What are the best ways to lower my taxable income?

    Paying taxes is an unavoidable obligation each year, but individuals and business owners can take advantage of various strategies for tax savings.
  10. Economics

    EU Probes Tax Laws To Catch Corporate Cheaters

    Recently, the EU has launched an investigation into tax deals between Amazon and the country of Luxembourg.

You May Also Like

Hot Definitions
  1. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  2. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  3. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  4. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  5. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  6. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
Trading Center