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Definition Of Qualifying Relative

Updated: November 25, 2022

Do you know whether or not you qualify for certain tax exemptions? There are several tax breaks that you can claim as long as you meet various eligibility requirements. Some of the most common include the earned income credit and the child tax credit. 

But, did you know you might also be eligible to include a qualifying relative on your tax return? The good news is we created this article to break down everything you need to know. Keep reading to learn all about a qualifying relative and how it works!

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    KEY TAKEAWAYS

    • A qualifying relative is a dependent of an individual taxpayer but does not have to be related biologically. 
    • There are four conditions and criteria outlined by the Internal Revenue Service (IRS) that an individual must meet in order to be eligible as a qualifying relative. 
    • The personal exemption for a qualifying relative was temporarily removed when the Tax Cuts and Jobs Act (TCJA) was introduced in 2018.

    What Is a Qualifying Relative? 

    The federal income tax code describes a qualifying relative as someone that’s claimed as a dependent by another taxpayer. This assumes that the individual taxpayer has provided financial support to the qualifying relative throughout the previous tax year. 

    However, the personal exemption for a qualifying relative was eliminated temporarily when the Tax Cuts and Jobs Act (TCJA) of 2018 were introduced. This means that even if you claim a qualifying relative as a dependent, you won’t be able to receive an additional exemption. 

    The standard deduction available under the TCJA was almost double what was previously available, which is why if you claimed a qualifying relative you aren’t eligible for additional exemptions.

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    How Does Claiming a Qualifying Relative Work? 

    The way the Internal Revenue Service (IRS) defines a qualifying relative is incredibly straightforward. It doesn’t provide much room for misunderstanding. But as a qualifying relative, individual taxpayers can claim that person as a dependent on their tax return. 

    The individual taxpayer can then receive additional tax credits to help reduce the total amount of tax that they owe. For example, some of the biggest tax benefits available include: 

    • The Earned Income Credit 
    • The Child Care Credit 
    • The Child Tax Credit 
    • The Head of Household 

    The IRS describes a qualifying relative as someone that’s related to the taxpayer and now lives with or is taken care of in the household. However, the IRS also states that a qualifying relative doesn’t necessarily have to be biologically related to the taxpayer. 

    Dependents should not be earning any income throughout the tax year, but instead relying on the household income generated by the taxpayer. Spouses of taxpayers are not considered to be qualifying relatives. 

    As well, there are four distinct tests outlined by the IRS that must be passed in order for someone to get classified as a qualifying relative. The four tests are:

    • The qualifying relative of the taxpayer can’t be their qualifying child or a child of anyone else. Taxpayers are unable to claim them on their tax returns. 
    • The qualifying relative must live in the household of the taxpayer or be related in some way or another. This could be as a sibling, grandparent, child, parent, niece or nephew, aunt or uncle, some in-laws, or even some step-relatives. Technically, an individual not related to the taxpayer can still be a qualifying relative. If this is the case, the qualifying relative must have lived with the taxpayer all year. Plus, a relative of the taxpayer that doesn’t live with them could also be a qualifying relative. 
    • Any potential qualifying relatives cannot earn a gross income of over $4,200. Yet, this amount can increase year after year so it can be a good idea to confirm the specific amount with your tax specialist or on the IRS website. 
    • The qualifying relative must receive the majority of their yearly income or financial support for the entire year directly from the taxpayer. 

    The IRS also outlines five requirements for an individual to be considered as a qualifying relative. The requirements are: 

    • The qualifying relative must be a U.S. citizen, a U.S. resident alien, or a resident of either Mexico or Canada.
    • The qualifying relative must not be a qualifying child.
    • The qualifying relative must have some type of relationship with the taxpayer, such as a parent, grandparent, stepchild, child, or sibling.
    • The qualifying relative must not earn a gross income of over roughly $4,300 (check the IRS website for the most up-to-date income limit).
    • The qualifying relative must receive more than half of their support directly from the taxpayer during the year.
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    Qualifying Child vs Qualifying Relative 

    It was mentioned above, but a qualifying relative could fall under a few different criteria. They could be a parent, grandparent, stepchild, child, sibling, niece or nephew, aunt or uncle, and more. There isn’t an age test to be considered as a qualifying relative. 

    On the other hand, a qualifying child has a few other criteria to highlight. For a child to be eligible as a qualifying child, there are five requirements they must meet: 

    • The relationship requirement — the qualifying child must be either:
    1. A son or daughter, either naturally or as a stepchild, or a descendent 
    2. A sibling or step sibling 
    3. A foster child or adopted child 
    • The child must be younger than 19 years of age by the end of the calendar year. Or, they must be younger than 24 years old if they’re a full-time student. Permanently disabled children don’t have an age limit. 
    • The dependent must live in the same principal residence as the taxpayer for a minimum of half of the calendar year. This doesn’t include various temporary absences such as vacation, school, or illness. 
    • The child dependent cannot provide more than half of their own support throughout the year. This remains the same even if the claimed dependent is able to.
    • Individual taxpayers are only able to claim one dependent. In this case, having more than one taxpayer means you must decide who is going to claim the exemption. 

    If an individual doesn’t meet the five requirements outlined above to be considered as a qualifying child, they may still be eligible as a qualifying relative.

    Summary

    A qualifying relative is someone that an individual taxpayer can claim for tax purposes. A qualifying relative can be a child, stepchild, niece or nephew, aunt or uncle, adopted child, grandparent, or sibling, for example. There isn’t a requirement for a qualifying relative to be biologically related to the taxpayer. 

    There are certain tax benefits the taxpayer can receive in return for claiming a qualifying relative. These can include the child care credit, the child tax credit, the earned income credit, and the head of household credit, for example. 

    The IRS outlines specific requirements that individuals must meet to be considered either a qualifying relative or a qualifying child. As long as the claimed dependent meets the outlined requirements, you can take advantage of several tax benefits.

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    FAQs About Qualifying Relative

    How Much Is the Deduction for a Qualifying Relative?

    The amount you can deduct for the qualifying relative is $500 per dependent in 2022.

    Can a Friend Be a Qualifying Relative?

    A qualifying relative must live with the individual and be related in some way. It doesn’t have to be biological, but there must be some relation such as niece or nephew, aunt or uncle, or sibling for example.

    When Can You No Longer Claim a Child as a Dependent?

    You can only claim a child as a dependent if they are younger than 19 years old, or 24 years old if they are a student. There is no age limit if the child is permanently and totally disabled.

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