The pandemic has caused a lot of disruption worldwide to life as we knew and now know it. Its direct impact has been felt across families in ways that have not been entirely pleasant. Across the US, families continue to grapple with isolation, new social norms and, quite significantly, finances. Among other questions that may have crossed your mind at this time, you may be asking, “can I claim my adult child as a dependent?”. Well, it is good to know that the Biden administration recently signed the American Rescue Plan Act into law in March 2021. It might be a ray of light for your family’s finances, especially when it comes to taxes. In this post, you will find the answer to if you can claim your adult child as a dependent for a tax cut or tax break benefits?
Before you read the rest of this article, a disclaimer. What you read here should not be taken as professional advice. I am not a professional in that sense. The information you read here has been found from research. It is meant to make you aware of tax credits available to you if you were not aware of them already. I then encourage you to do further research on your eligibility and subsequently how to apply for them. This post only serves as a helpful starting point for those in need of information for options available to them. With that out of the way, let’s dive right in.
What are the claimable benefits?
Every bit of extra cash the IRS allows you to keep at the end of the financial year is a blessing for many American families. Depending on your situation, all tax credits you are eligible for can add up to substantial sums. For instance, the 2020 Child Tax Credit is worth $2000. Suppose you have adopted a child with special needs. In that case, a maximum claimable credit of up to $14,300 is possible, according to figures released by Forbes. It is also possible to claim up to $500 in tax credits for other dependents. You could also be eligible for larger stimulus checks. What you can and cannot claim is entirely down to a set of IRS requirements you must meet. These include but are not limited to your gross annual income (adjusted) and your marital status.
Your nationality and that of your dependent are also considered, along with a series of other assessments. These other assessments are not discussed in this post. This article is here to help you know if you can claim your Adult Child as a dependent for tax purposes. Now, we’ll look at how the authorities define a ‘Dependent’.
Who can be my dependent?
Beverly Bird, who writes for ‘The Balance’, provides a helpful definition of ‘dependent’ in the absence of a straightforward meaning from the IRS. She quotes the Tax Cut and Jobs Act (TCJA) definition as anyone “other than the taxpayer or Spouse” who qualifies the taxpayer to claim a dependency exemption. So, in a literal sense, your dependent is anyone who relies on the taxpayer (in this case, assuming it is you) for support. A bevvy of IRS rules mostly set out to establish this relationship.
Going by this definition, the age of the dependent only comes into play to categorise if your dependent qualifies for tax credits as a ‘qualifying child’ or ‘qualifying relative’. In a nutshell, you can claim for dependents of any age depending on your individual circumstance. As an illustration, the IRS website states explicitly that “There’s no age limit if your child is “permanently and totally disabled” or meets the qualifying relative test.” What you must watch out for are the rules that make you and your dependent eligible for credits or not.
Dependency & Relationship Qualifiers
Regardless of the definition of dependent provided by TCJA, your adult child can qualify as your dependent child or qualifying relative; you should familiarise yourself with other IRS restrictions and relationship qualifiers. Before giving you the main qualifiers of note, here are some exceptions found within IRS publications:
- Certain adopted children are exempted.
- Children born or who died during the year qualify for exemptions and children of divorced or separated parents (or parents who live apart). Temporary absences or sad cases of kidnapped children also qualify for an exemption.
- An exception is also available for disabled persons who have income from sheltered workshops.
The main thing you should probably note in terms of main qualifiers for your child is that the child must be under the age of 19 at the end of the financial year and younger than you or your spouse (if filing jointly). Your child will also qualify if the child is a student, is under the age of 24 at the end of the financial year and younger than you and your spouse. If the child is disabled, the age won’t matter. Suppose your other child does not qualify as a dependent under these criteria. In that case, it will be worth checking if the child falls under “qualifying relative”. There is a helpful table you can view here to review the IRS’s relationship qualifiers further.
To Claim or Not to Claim?
Though the process of knowing what you and your child qualify for can be daunting, I am not one for discouraging people from seeking and claiming whatever they are legally entitled to. Always seek advice and further help. The American government have passed legislation and made pots of funds available to ease financial difficulties caused by the pandemic. By all means, educate yourself on what you are entitled to and claim it. And, while you are at it, be mindful of fraudsters. The FAQs on the IRS website will give you ideas on where to start. To all mothers out there, you got this.