IRS Tax Law Changes
Capital Gains, Interest and Dividends
Education Credits, Scholarships
Foreign Bank Reporting
Social Security, Medicare, Self Employment Tax
Tax Deadlines, Extensions, Late Payments, Estimated Tax
Tax Resident, Nonresident, Dual Status
Dependents, Child Tax Credit, Dependent Care Credit, Child Tax Return, Nanny Tax
As of tax year 2018, personal exemptions, which include those for dependents, are no longer available at the federal level.
All dependents must have a social security number (SSN). If your dependent is a nonresident alien who is not eligible to get a social security number, you must list the dependent's individual taxpayer identification number (ITIN) instead of an SSN on the tax return. To apply for an ITIN, Form W-7 is filed with your tax return.
Children usually are citizens or residents of the same country as their parents. If you were a U.S. citizen when your child was born, your child generally is a U.S. citizen. This is true even if the child's other parent is a nonresident alien, the child was born in a foreign country, and the child lives abroad with the other parent.
Important Note: A spouse is never claimed as a dependent on Form 1040.
In general, an individual may not be claimed as a dependent unless:
He/she is a U.S. citizen, a U.S. national, a U.S. resident, or a resident of Mexico or Canada, and
You are the only person claiming him/her as a dependent and he/she didn't file a joint tax return, and
You provided more than half of his/her support in 2023, and
Your dependent is a qualifying child and lived with you more than half the year, and
(a) your child was under age 19 at the end of 2023, or
b) your child was under age 24 at the end of 2023 and was a full time student for at least five months of the year.or
Your dependent is a qualifying relative, or was a member of your household all year, and
He/she had gross income of less than $4,700 in 2023
(Note: Foreign students on an F, J, M or Q visa are not considered tax residents for their first 5 years on the visa, and so cannot be claimed as dependents).
Nonresidents (Form 1040NR): You cannot claim dependents (with certain exceptions for residents of Canada, Mexico, South Korea and India).
Child Tax Credit
For tax year 2023, the maximum child tax credit is $2,000 per qualifying child under age 17 at the end of 2023. You must have claimed the child as a dependent on your federal tax return.
Up to $1,600 per qualifying child in 2023 is refundable with the additional child tax credit.
For the 2023 tax year, the child tax credit is worth $2,000 per qualifying dependent child if your modified adjusted gross income is $400,000 or below (married filing jointly) or $200,000 or below (all other filers). If your MAGI exceeds those limits, your credit amount will be reduced by $50 for each $1,000 of income exceeding the threshold until it is eliminated.
Your child must have a social security number issued before the due date of your tax return (including extensions). Children with an ITIN cannot be claimed for either credit. The children must be a U.S. citizen, U.S. national, or U.S. resident alien.
Child must be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister or a descendant of any of these individuals, which includes your grandchild, niece or nephew.
You must have provided at least half of the child’s support during the last year, and the child must have lived with you for at least half the year (there are some exceptions to this rule; the IRS has the details here).
Dependent Care Credit
If you paid someone to care for your child or a dependent so you could work, look for work or go to school, you may be able to claim a Child and Dependent Care Credit of up to $3,000 for one child under age 13 or $6,000 for two or more children under age 13. To be eligible for the refundable portion of the credit for 2023, you (or your spouse in the case of a joint return) must have your main home in one of the 50 states or the District of Columbia for more than half of the tax year.
Dependent care/childcare expense while you worked, looked for work, or studied:
(1) Only include expenses that were (a) paid in 2023 for 2023 dependent care and/or (b) prepaid in 2022 for 2023 dependent care
(2) If married, both spouses must have earned income (from work); or one spouse worked and the other was a full time student for 5 months or more
(3) A child must be under age 13 when care was provided (or a dependent physically/mentally unable to care for him/herself)
(4) School tuition only qualifies up to the pre-school level. Include nursery, preschool, day camp, after school childcare, and vacation care.
Dependent/Child Tax Return
If a child whose gross income has both earned and unearned income, he or she must file a return for 2023 if:
Election to Report Child Income on Parent Tax Return
Your child will not have to
file a tax return if you elect to report your child’s income on your return. You
can make this election if your child meets all of the following conditions.
• The child was under age 19 (or under age 24 if a full-time student) at the end of 2023.
• The child’s only income was from interest and dividends, including capital gain distributions and Alaska Permanent Fund dividends.
• The child’s gross income for 2023 was less than $12,500.
• The child is required to file a 2023 return unless you make this election.
• The child does not file a joint return for 2023.
• There were no estimated tax payments for the child for 2023 (including any overpayment of tax from his or her 2022 return applied to 2023 estimated tax).
• There was no federal income tax withheld from the child’s income.
• You must also qualify (see https://www.irs.gov/pub/irs-pdf/f8814.pdf).
Rate may be higher.
If you adopt a child, you may be eligible for an Adoption Credit.
Tuition Credits for Dependents
See Education Credits
See Nanny Tax