Taxpayers with dependents who do not qualify for the Child Tax Credit might be able to claim the Credit for Other Dependents, also known as the Family Tax Credit and the Non-Child Dependent Tax Credit. It is a non-refundable credit that reduces or, in some cases, eliminate a tax bill. However, the Internal Revenue Service (IRS) cannot refund any portion of the credit that may be left over.
Here is more information to help determine whether you can claim the Credit for Other Dependents on your 2022 tax return.
What is a Dependent?
For tax purposes, the IRS defines a “dependent” as someone “other than the taxpayer or spouse” who qualifies to be claimed by someone else on a tax return. A dependent relies on another person for at least half of their financial support for the year, such as housing, food, clothing, and necessities.
The IRS rules for qualifying dependents cover almost every conceivable situation, from domestic partners to emancipated children, and might be confusing in certain family situations. Fortunately, most of us live simpler lives, and the basic rules will cover almost every qualifying relative. For example, you can claim a son off at college, a daughter with a part-time job, an elderly parent living with you full-time, or a cousin who stays with you during the summer.
What is the Maximum Credit Amount?
The maximum credit amount is $500 for each dependent. To qualify for the credit, the dependent:
Can be any age, including those 18 or older.
Must be a U.S. citizen, a U.S. national, or U.S. resident.
Must have Social Security numbers or Individual Taxpayer Identification numbers.
Cannot earn a gross income of more than $4,400.
The credit begins to phase out when your income is $200,000 or more. This phaseout begins for married couples filing a joint tax return at $400,000.
Here to Help
Qualifying for this credit can make the difference between owing money and receiving a refund. If you have questions about your unique situation or need strategic financial advice, we are here to help. Contact us to let us know how we can best support you.