We're starting off tax season with some fun quizzes to help people with their tax IQ
Question 1
Which of the following could be claimed as a dependent? It’s assumed that the taxpayer provided most of their financial support for the year and that all individuals are US citizens.
1- A premature baby that died one week after being born
2- An unrelated 44-year-old friend who lived with you all year and had less than $5000 of income.
3- A 23-year-old daughter who's a full-time college student and attends a university that is out of state
4- An 85-year-old aunt who lives in another state and only has Social Security income of $15,000
5- All of the above
scroll down for the answers
1- Yes a baby can be claimed for an entire year in which it was born, even if it dies shortly after birth- as long as it has a live birth certificate. Normally, dependents need to live with someone over half of the year.
2- Yes, anybody, related or unrelated, can be claimed at any age if they live with a person all year and have income below a certain threshold ($5,050 for 2024).
3- Yes, a college student who lives away from home temporarily for school is still considered living with the parents for the year. Students age 23 or younger qualify as dependents automatically, but those 24 and older must have income below the $5,050 threshold.
4- Yes. Many relatives can be claimed as dependents even if they don't live with the taxpayer. (check IRS.gov for the full list) Normally there is a $5,050 income upper limit for dependents income, but that's only including taxable income. Auntie's $15,000 of social security is 100% non-taxable if that's her only income.
5- Yes- it was all of the above. The key concept here was that the taxpayer provided over 50% of their financial support. The rules for claiming dependents can be confusing, but the rewards can be substantial. Just be sure that the person you are claiming is aware and doesn't file and claim themselves. For more info, go to https://www.irs.gov/credits-deductions/individuals/dependents
Thanks for reading. Dan@buengeraccounting.com
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