<topic sku="core" tNum="289581" author="sallyh" xmlns="x-schema:hhTopicSchema.xml"><index><title>Learn about dependency exemptions</title><category>tax</category><klink type="prcdr">Tell me about dependency exemptions</klink></index>
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<p>A dependent is basically someone for whom you provide a home and financial support. If the dependent meets certain tests, you can claim a dependency exemption on your tax return. Each dependent you claim reduces your taxable income by $2,900 in 2001. You can also take an exemption for yourself, and one for your spouse if you are filing a joint return. For example, if you are married and filing a joint return, and you have two dependent children plus a mother-in-law who meets the test to be your dependent, you can claim five exemptions. This reduces your taxable income by 5 X $2,900, or $14,500.</p>
<p>If you provide a home or financial support for someone, check the five tests for claiming the person as your dependent. You may find that your adult children, parents, or other relatives whom you support may qualify, as well as other persons-related or not-who live in your home. Special rules apply to divorced or separated parents and situations in which two or more people together provide support for an individual. To count as one of your dependents for whom you can take an exemption, a person must pass each of the following five tests:</p>
<ul>
<li><emph>The gross income test.</emph> To count as one of your dependents, the person must have had less than $2,900 in gross income (for 2001). Gross income includes all taxable income, but not scholarships or Social Security benefits that are not subject to tax. This rule doesn't apply if the person is your child who is either under 19 years old at the end of the year or a full-time student under 24 years old at the end of the year. In either case, your child may have any amount of income and still be your dependent, as long as the other rules are met.</li>
<li><emph>The support test.</emph> You must have supported the person to the extent that you covered at least half of the person's living expenses for the year. Living expenses include food, lodging, medical and dental bills, vacations, clothes, books, education, recreation, transportation, and more. Include expenses that are for the entire household, such as rent and utilities, divided by the number of members in the household.</li>
<li><emph>The member of household or relationship test. </emph>The person meets this test if he or she is related to you in one of the following ways: </li>
<ul>
<li>Lineal descendant (child, grandchild, great-grandchild, great-great-grandchild, or a step-lineal descendant, such as stepchild, or a child placed with you for adoption by an authorized agency). </li>
<li>Brother or sister (including stepbrothers and stepsisters and half brothers and half sisters). </li>
<li>Lineal ancestor (parent, grandparent, great-grandparent, great-great-grandparent, or step-lineal ancestor). </li>
<li>Niece, nephew, aunt, or uncle<mdash/>but not if related to you only by marriage. </li>
<li>In-laws (father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, and sister-in-law). </li>
<li>A foster child or a child not placed with you by an authorized adoption agency must live with you for the entire year to meet this test. Anyone else, even if not related to you, meets this test if the person lived in your home for the entire year and is not your spouse. </li>
</ul>
<li><emph>The joint return test. </emph>The person must not file a joint tax return for the tax year, unless the person and his or her spouse were not required to file and only filed to get a refund of taxes withheld.</li>
<li><emph>The citizenship test. </emph>The person must be a citizen, national, or resident of the United States, a resident of Canada or Mexico, or an alien child whom you have adopted and who lived with you for the entire year.</li>
</ul>
<p> For more information, see IRS Publication 17, Your Federal Income Tax, on the <alink type="xtnl" href="http://www.irs.gov">IRS Web site</alink>.</p>
