One of the drawbacks to depending on someone else for support is that the IRS doesn't take much pity on you as a taxpayer. Filers with qualified dependents get several tax breaks, but dependents themselves typically aren't privy to the same perks. It doesn't matter if the taxpayer who can claim you as a dependent doesn't actually do so. If you're even eligible as someone else's dependent, the same rules apply.
Are You a Dependent?
IRS rules for dependents are complex, so you might not actually qualify, even if you think you do. If you lived with your parents more than half the tax year, if you were not yet 19 years old at the end of the tax year--or 24, if you go to school full time--and if your parents provided more than half your financial support, then, yes, you're their dependent. If you live with your boyfriend or girlfriend, you might be a dependent if you lived together the entire tax year and if you paid for less than half your own support. You must have earned less than $3,700 as well. If you're married, your spouse can't claim you as a dependent.
Most taxpayers have the option of claiming either a standard deduction or itemizing deductions. The standard deduction is a blanket number that applies to everyone in a certain category. If you're someone's dependent, your standard deduction is limited. It's either $950, or your earned income for the year plus $300, whichever amounts to more. But there's a catch. As of the 2011 tax year, the standard deduction for a single filer is $5,800, and your deduction can't exceed this amount. If you earned $5,600 and added $300, you can't deduct $5,900. You're limited to a $5,800 deduction.
Taxpayers can also itemize deductions if itemizing adds up to more of a deduction than the standard allowance. Dependents can do this as well, but it's usually not easy to come up with enough itemized deductions so they amount to more than your standard deduction. You can itemize things like interest paid during the tax year, uninsured medical expenses, and real estate taxes if you own your home. You can also itemize state and local income taxes you paid during the tax year. However, some of these deductions are limited to a percentage of your income. For example, if you qualify as your boyfriend's or girlfriend's dependent, this means you earned a maximum of $3,700. You can only deduct uninsured medical expenses that exceed 7.5 percent of this amount, or $277.50. If you had $300 in qualified medical expenses, only $22.50 of that would count toward your itemized deductions.
Almost all tax credits are designed to help taxpayers who are supporting dependents, and not the dependents themselves. Tax credits are those nifty deductions that subtract from your tax bill after you figure out what you owe the IRS. Dependents don't typically qualify for these. For example, anyone who is someone else's dependent can't claim the earned income tax credit.
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