Today’s families are often caring for children as well as aging parents. Being sandwiched between generations can be stressful emotionally and financially. There are tax deductions in place, some of which are based on dependent age, to help offset the cost of caring for dependents. When you filed taxes for the 2017 tax year or before, you could claim an exemption for your dependents. The Tax Cuts and Jobs Act have eliminated that exemption, but other credits and deductions will help offset those changes.
Understanding the Benefits of Claiming a Dependent
For tax years before 2018, the primary benefit of claiming a dependent was claiming each qualifying dependent as an exemption. In 2017, for example, the exemption amount was $4,050 for each dependent. An exemption lowers the amount of your taxable income. If you claimed two children as qualifying dependents on your taxes in 2017 and your income was $50,000 for the year, you would be taxed on $41,900 (less any other exemptions or deductions).
The TCJA eliminated exemptions for dependents beginning with the 2018 tax year. However, to compensate for this, the standard deduction is significantly higher for 2018. For example, if your filing status is single for your 2018 taxes, which are filed in 2019, the standard deduction is $12,000. The standard deduction for single filers for the 2017 tax year is $6,350. The standard deduction has doubled.
Another benefit to having a qualifying child is the Child Tax Credit. This credit has also changed. For tax years before 2018, the Child Tax Credit was nonrefundable. This means that it could lower your tax liability to zero, but you would not be refunded the difference.
Beginning in 2018, the Child Tax Credit is worth $2,000, and up to $1,400 of the credit is refundable. This means that if you have a tax liability, it could be reduced or even eliminated by the credit, and any excess would be refunded to you. If you have two qualifying children and you owe $1,000, your liability would be eliminated, and you would receive a refund of $1,800.
What’s the Age Limit to Declare a Dependent on Income Tax?
When you’re preparing your income taxes, it’s common to wonder, “Until what age can you claim a dependent?” For tax years before 2018, that was an important question to answer to claim an exemption. It’s still a relevant question for filing your income taxes for the 2018 tax year and beyond due to the Child Tax Credit.
To claim someone as a dependent in tax years before 2018, that person would need to be either a qualifying child or a qualifying relative. The dependent age limit for a qualifying child is under age 19 at the end of the tax year. She also must be younger than you or your spouse. If the qualifying child is a full-time student, she must be under age 24 at the end of the year. The IRS considers students to be full-time if they attend school for five months of the year or more.
To claim the Child Tax Credit, the child needs to be under age 17 at the end of the tax year. The TCJA also introduced a new tax credit of $500, though it's for dependents who don’t meet the age requirements. This new tax credit doesn't have a dependent age limit.
Exceptions to Age Limits on Declaring Dependents
The IRS provides exceptions to the tax dependent age limits in certain circumstances. If the child is completely disabled and unable to work, there is no dependent age limit for taxes for that child. There is no dependent age limit for taxes if you can claim the dependent as a qualifying relative.
Requirements for Claiming a Qualifying Child
Besides the dependent age limit for taxes, there are several other requirements to claim a qualifying child. For example, the child must be your son or daughter, step-son or step-daughter, a sibling, a half-sibling, a step-sibling or the child of any of the relatives listed. You can also claim adopted or foster children. The qualifying child must also be a U.S. citizen, U.S. national or a U.S. resident alien.
The child also must live with you for more than half the year. There are exceptions to this rule, though. For example, a child who is temporarily absent due to being in school or away for medical care, it is counted as living with you. The child must not be providing more than half of his support, and he must not file a joint return unless the return is just to claim a refund of estimated taxes or withheld income tax.
You can’t claim a qualifying child if you are being claimed as a dependent on someone else’s taxes. There are also special circumstances for divorced or separated parents. If the custodial parent agrees to it in writing, a non-custodial parent can claim a child as a dependent, even if the child doesn’t live with the non-custodial parent the majority of the time. You must provide documentation when you file your tax return.
Requirements for Claiming a Qualifying Relative
A qualifying relative could also be claimed as a dependent for tax years before 2018. A qualifying relative can’t be a qualifying child. The qualifying relative must also either live with you all year as a member of your household or be related to you if she doesn’t live with you. The qualifying relative must be closely related and includes children, grandchildren, siblings, parents, grandparents, step-parents, step-siblings, nieces and nephews, in-laws and half-siblings.
Another requirement is that the qualifying relative’s income must be less than $4,050 for the 2017 tax year. You also need to provide more than half of the person’s total support to claim that person as a qualifying relative. If multiple people support the person, only one person can claim the deduction. Everyone else who provides support must agree in writing to waive the deduction.
Claiming a Dependent for the 2018 Tax Year
With the passing of the TCJA in December of 2017, you can no longer claim personal exemptions on your taxes. You can still claim a Child Tax Credit, though, and the standard deduction for 2018 is significantly higher. If you are filing as single, your standard deduction is $12,000 for the 2018 tax year. If you are married filing jointly, your standard deduction is $24,000. If you are filing as head of household, your standard deduction is $18,000.
Claiming the Child Tax Credit for the 2018 Tax Year
There are also changes to the Child Tax Credit beginning with the 2018 tax year. The Child Tax Credit has gone from $1,000 per qualifying child to $2,000 per qualifying child. The income tax dependent age limit of 16 still applies, though. You also must include the child’s Social Security number on your tax form to receive the credit.
The Child Tax Credit is also refundable, which is a change from previous years. You can receive a refund of up to 15 percent of your earned income over $2,500 up to a maximum of $1,400 per qualifying child.
The maximum income you can earn and still take the Child Tax Credit is also higher for the 2018 tax year. If you are filing as single, your Adjusted Gross Income must be below $200,000 to receive the full credit. If you are married filing jointly, your AGI must be below $400,000. If you are filing as head of household, your AGI must be below $200,000. Your credit is reduced by $50 for every $1,000 your AGI is over the threshold.
There is also a new credit of $500, which can be taken for dependents who are not qualifying children. You can take advantage of this tax credit if you have a qualifying relative, including a child that is age 17 or older.
Claiming a Dependent for the 2017 Tax Year
If you have a qualifying dependent, you can still file an exemption for the 2017 tax year. These taxes were due to be filed in April 2018. You can claim exemptions using Form 1040EZ, Form 1040A or Form 1040. On Form 1040EZ, you combine your total exemptions with your standard deduction and enter the total on line five. On Form 1040A, you complete lines 6a through 6d and line 26. On Form 1040, you complete lines 6a through 6d as well as line 42.
You can claim $4,050 for each exemption in 2017. You can typically take an exemption for yourself, your spouse and your qualifying dependents. The amount of your exemption may be lower, though, depending on your income.
If you are married filing jointly, your exemption will be reduced if your AGI is $313,800 or higher. If you are filing as head of household, your exemption will be reduced if your income is $287,650 or higher. If you are filing as single, the exemption phaseout starts at an AGI of $261,500. Your exemption is reduced by 2 percent for each $2,500 your AGI exceeds the income threshold.
Claiming the Child Tax Credit for the 2017 Tax Year
If you have one or more qualifying children who meet the income tax dependent age requirements, you can also claim the Child Tax Credit and the Additional Child Tax Credit on your 2017 taxes. The maximum amount you can claim for the Child Tax Credit is $1,000 per qualifying child. The dependent age limit for this credit is age 16.
To tax advantage of the Child Tax Credit, you must owe taxes. The 2017 Child Tax Credit is nonrefundable, so it reduces your liability, but it does not provide you with a refund. You also have to meet the income requirements. If you are married filing jointly, your AGI must be below $110,000 to receive the full credit. If you are single or head of household, your AGI must be below $75,000 to receive the full credit.
You may receive a reduced Child Tax Credit if your income is above a minimum threshold. This phaseout starts at an AGI of $75,000 if you are filing as single or as head of household. The phase-out starts at $110,000 for couples who are filing jointly.
You can only claim the Child Tax Credit if you complete Form 1040, Form 1040A or Form 1040NR. You will also need to complete Schedule 8812.
You may also be able to qualify for the Additional Child Tax Credit on your 2017 taxes. This credit is refundable. You can be refunded up to 15 percent of your taxable income over $3,000. The maximum credit you can receive is $3,000. If you answer “yes” on line nine or 10 of your Form 1040, Form 1040A or Form 1040NR, you can fill out Schedule 8812 to see if you qualify for the Additional Child Tax Credit.
- IRS: Publication 501 (2017), Exemptions, Standard Deduction, and Filing Information
- IRS: Child Tax Credit
- H&R Block: The New Standard Deduction and Removal of Exemptions – What Does It Mean to You?
- Forbes: New: IRS Announces 2018 Tax Rates, Standard Deductions, Exemption Amounts And More
- Intuit Turbotax: Seven Requirements for the Child Tax Credit
- The Motley Fool: The 2018 Child Tax Credit Changes: What You Need to Know
- Marketwatch: Even Your 20-Something Kid Can Qualify for This New Child Tax Credit
- Forbes: IRS Announces 2017 Tax Rates, Standard Deductions, Exemption Amounts And More
- Intuit Turbotax: Rules for Claiming a Dependent on Your Tax Return
- Intuit Turbotax: What is the Additional Child Tax Credit?