IRS Penalties

Claiming dependants is an ideal way to lower the amount of taxes that you pay. For many people, the tax amounts can vary depending on the number of people that are under your care. In order to claim a dependant, though, you must be sure that the person qualifies as a dependant under the tax code laws. If they do, then this can help to reduce the amount of taxes that you owe considerably. The laws regarding dependants do change, though, so be sure that your information is current before you use it on your tax preparations.

What's A Dependant Then?

The term dependant implies (and means to the IRS) that the person relies on you for their support. This is opposed to an independent that provides support for themselves. Only one person can claim the dependant otherwise there will be a problem legally speaking. In fact, if two people claim a dependant then an audit is the only way that this issue can be resolved.

Why would you want to claim someone as a dependant anyway? The benefit here comes into play from the various deductions that can be taken when you have dependants. For example, children offer several different deductions that can be rather lucrative in the right sense. For example, the child tax credit, the earned income credit and the childcare tax credit are all examples of credits that can be taken by the tax payer that is responsible for that dependant's care. This can help to save you thousands of dollars in taxes. In addition, the head of household tax filing status is another example of how dependants can save you money.

Children are one of the most likely dependants. In order to quality, they must have a relationship to you. For example, they must be your child, your step child, adopted, foster, sibling or descendent of one of these people in order to qualify. They also must live with you for more than half of the year. In addition, they must be under 19 or under 24 if they are enrolled full time in college. Or, they must be of any age and be totally and permanently disabled to qualify.

In addition to this, you must provide support to the person. Often times, this is why adults can qualify as your dependant as well. Claiming dependants on your tax return is an important part of paying the right amount of tax. Yet, do not make a mistake here because it can be costly later. Instead, always check with your professional tax preparer to get more understanding about the status of the dependant.

IRS Penalties |