What Is IRS Publication 929: Tax Rules for Children And Dependents?

IRS Publication 929: Tax Rules for Children and Dependents is a document published by the Internal Revenue Service (IRS). It describes filing requirements for children and other dependents who have income of their own to report.

Understanding IRS Publication 929: Tax Rules For Children And Dependents

IRS Publication 929: Tax Rules for Children and Dependents is published by the IRS in order to help individual taxpayers through their tax return, specifically with regard to tax law as it affects children and dependents.

IRS Publication 929 provides guidance on how people claimed as dependents should compile and file tax information. It outlines in detail the filing requirements for individuals considered dependents and includes how to calculate the dependent's standard deduction and any applicable exemptions.

The publication also includes information on how investment income should be reported for children, regardless of whether those children are claimed as dependents.

While children are the most commonly recognized type of dependent, you may be able to claim other individuals in your household as a dependent on your tax return. The aged and disabled also fall into that category, but the IRS offers two tests that can help you determine if you as a taxpayer can claim another individual on your tax return.

The two tests are the Relationship Test and the Member of Household Test. Dependents do not have to be blood relatives of the taxpayer in order to be a dependent. The individual does not have to be a biological relative or a member of the taxpayer’s nuclear family. They do have to have resided with the taxpayer throughout the year.

The Benefit of Having Children and Dependents

There are big tax benefits available to a taxpayer able to claim dependents. The most popular and best known of these benefits is the Child Tax Credit. The credit lowers the taxpayer’s liability and offers additional tax relief for taxpayers with children.

With the passing of the new tax law in December 2017, the Child Tax Credit doubled to $2,000 per qualifying child; it also makes $1,400 of that amount refundable. Now that the credit is refundable, a taxpayer who claims the Child Tax Credit who owes no taxes, or less than $1,400, can receive that amount as a refund.

For the 2021 tax year, the Child Tax Credit has been raised to $3,000 for children ages six through 17 and $3,600 for children under six. This change is part of the American Relief Act. The credit will be paid monthly, not at tax time, and is a full refund, not partial depending on income. The credit is phased out for singles with incomes above $75,000 and couples with incomes above $150,000.

In addition to the Child Tax Credit, there is the Additional Child Tax Credit, a refundable tax credit available to families with three or more qualifying dependents.

Other dependents—including children ages 17–18 and full-time college students ages 19–24—may also qualify taxpayers to receive a nonrefundable credit of up to $500 each.