It should come as no surprise that providing care for adult children, relatives, or parents can result in additional financial strain. To alleviate this stress, the IRS offers a credit for dependents over the child tax credit age of 18.
For each dependent who meets these requirements, you may qualify for a $500 credit:
- Is 17 years of age or older.
- Has a taxpayer identification number.
- Are dependent parents or other qualifying relatives supported by the taxpayer.
- Are dependents living with the taxpayer who aren’t related to the taxpayer.
You Can Claim This Credit If:
- You claim the person as a dependent on your tax return.
- You cannot use this dependent to claim the child tax credit or additional child tax credit.
- The dependent is a U.S. citizen, national or resident alien.
This credit can be claimed in addition to the child and dependent care credit and even the earned income credit. You can check whether you qualify for the credit by using the IRS Interactive Tax Assistant: Does My Child/Dependency Qualify for the Child Tax Credit or Credit for Other Dependents? The process takes about 10 minutes to complete.
Know The Details
While the $500 credit isn’t refundable, you can use it to reduce or eliminate your tax bill – it will be deducted from your tax bill. However, the IRS will not refund any portion of it that is left over.
It covers a wide range of people: parents, stepparents, grandparents, siblings, aunts, uncles, in-laws, and even people who aren’t related to you. Over the course of the tax year, you have to provide your dependent with more than half of his or her financial support.
Another key qualification is whether the dependent lived without you throughout the year. In some cases, the IRS will exempt some relatives from the yearlong rule, such as your parents – provided you support them at least half of the time.
As of tax year 2021, adult dependents who don’t qualify for the child tax credit are limited to gross incomes of less than $4,300. The credit for “other dependents” phases out if you earn more than $400,000 and are married and filing jointly or more than $200,000 for all other taxpayers. The income threshold is indexed for inflation, so it will increase periodically to keep up with the economy.
Income thresholds of less than $4,300 are not applicable if your dependent is disabled and earns money from a sheltered workshop – a school that provides programs designed to alleviate your dependent’s disability and is run by tax-exempt organizations or government entities.
This dependent credit is claimed on Form 1040. You must also complete IRS Form 8862 if you tried to claim the child tax credit, the additional child tax credit, or the credit for other dependents but were denied for any reason other than a clerical or math error.
Understand Your Options
The credit for other dependents is smaller than the child tax credit, but it is available to a larger group of family members. If you have minor children, stick with the child tax credit, but if you have any other dependents, check out the other dependent option. Of course, you should consult a qualified tax advisor about your tax situation.
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If you have additional questions or concerns regarding your estate plan, tax planning or controversy, probate, or elder law, contact the experienced and trusted team at Sandoval Legacy Group, A division of Holstrom Block & Parke, A Professional Law Corporation, by calling (951) 787–7711 to schedule an appointment. No other law firm in Southern California has the knowledge and experience relating to estate planning, special needs planning, elder care, probate, conservatorships, business succession planning, tax planning, and trust administration as our lawyers and paralegal staff.