 Income tax 2021-2022. Who qualifies as your dependent? Part number two. Get ready to get refunds to the backs, diving into income tax 2021-2022. Most of this information can be found on the Form 1040 Tax Year 2021 Instructions found on the IRS website, irs.gov. So when we're thinking about the dependents, remember the strategy is gonna be you wanna know the general rules for the dependents. Usually that's gonna be fairly straightforward and we're gonna go through the questionnaire, by the way, related to the general rules and a future presentation. Here we're gonna look into some more of those gray areas which is the next item. You wanna research those items where things aren't as clear, such as when there's custody issues and oftentimes, at least with regards to the dependents, when there's custody issues, for example, you wanna start there oftentimes at the Form 1040 Instructions which can often reference you to other areas to be looking into. So the items that could be affected by the dependents could be things like the child tax credit. That's like the first thing that comes to mind. If you don't qualify for that, you usually have the credit for other dependents. Those two things, of course, are kind of linked in terms of your questionnaire or thought process. You're thinking, is someone a dependent? First, do they qualify for a qualifying child? If yes, then that's the most benefit you're gonna get, typically. If not, then default. Do they qualify for other dependent credits? And they could affect your earned income tax credit if that's applicable for you and they could have an impact on your filing status, particularly with head of household. The standard deduction could be affected if it's affecting your filing status, for example, from single to head of household. It could affect the tax rates if your filing status is affected, your credits for the child tax credits and your refundable credits as well. This is where the dependents will be fined, will be put on your Form 1040 page. Number one, could have an impact on the credits. Page two here, Line 19 and 25 on the refundable portion. So we're gonna go through some more definitions on kind of like the gray areas that you could dive a little bit more deep into. We're gonna go into the standard flow chart, actually just look directly on the Form 1040 instructions, which is a great tool for the standard questionnaire as to whether someone qualifies for a dependent. First looking for the child tax credit, then for the other dependent. So exception to the citizen test. So if you are a US citizen or US national and your adopted child lived with you for all year as a member of your household, that child meets the requirement to be a US citizen in step two, question one, step three, question two, step four, question two. So we'll get into basically the questionnaire, but this is your exception to the general rule, exception to the gross income test. So we'll see the gross income test and then there's always gonna be these exceptions into the gray area with regards to what's the exception to the rule. If you're a relative, including person who lived with you all year as a member of your household, it's permanently and totally disabled. Defined later, certain income services performed at a sheltered workshop may be excluded for this test. For details, you can see publication 501. If that's gonna be applicable to you, you could find the publications on the IRS website, irs.gov, irs.gov. Exception to time lived with you test. So this is another common kind of thing you have. You got a time lived with you test. Then the question is, well, what about those exceptions to the rule? Here's kind of like the gray area involved there. Temporary absences by you or the other person for special circumstances such as school, vacation, business, medical care, military service, or detention in a juvenile facility, count as time person lived with you. Also see children of divorced or separated parents earlier or kidnapped a child later. If the person meets all the other requirements to be your qualified child, but was born or died in 2021, the person is considered to have lived with you for more than half of 2021. If your home was this person's home for more than half the time he or she was alive in 2021. If the person meets all other requirements to be your qualified child, but you adopted the person in 2021, the person was lost fully placed with you for legal adoption by you in 2021, or the person was an eligible foster child placed with you during 2021. The person is considered to have lived with you for more than half of 2021. If your main home was this person's main home for more than half the time since he or she was adopted or placed with you in 2021. Exception to the time lived with you rule continued. Any other person is considered to have lived with you for all of 2021. If the person was born or died in 2021 and your home was the person's home for the entire time he or she was alive in 2021. So obviously you could see these, whenever they make the rule, you could see these gray areas happening, what happens if someone died and so on. So they have to then fill in the gaps here. Or if you adopted the person in 2021, the person was lawfully placed with you for legal adoption by you in 2021, or the person was an eligible foster child placed with you during 2021, or your main home was the person's main home for the entire time since he or she was adopted or placed with you in 2021. Definitions, foster child. A foster child is any child placed with you by an authorized placement agency or by judgment decree or other order of any court of competent jurisdiction. And then a kidnapped child, if your child is presumed by law enforcement authorities to have been kidnapped by someone who isn't a family member, you may be able to take the child into account in determining your eligibility for head of household or qualifying widow-widdle. We're filing status, the child tax credit, the credit for other dependents and the earned income credit, the EIC for details. You can see publication 501, publication 596 for the EIC. And those publications can be found on the IRS website. Married person, if the person is married and file as a joint return, you can't claim the person as your dependent. So if someone else is basically married, then generally you can't claim them as a dependent because now they're filing a married filing joint return and typically then therefore no longer qualifies for someone else to file as a dependent. However, if the person is married but doesn't file a joint return or files a joint return only to claim a refund of withheld income tax or estimated tax paid, you may be able to claim him or her as a dependent. You can see publication 501 for details and examples. In that case, go to step two, question three for qualifying child or step four, question four for qualifying relative. So a somewhat unusual situation, but if that applies to you, you wanna go into the details, you can find them on the instructions to form 1040 and dive in a little bit more deeply there, then go on to the publications. Multiple support agreements. So if no one person contributed over half of the support of your relative, so now you've got a situation where you've got a support test, possibly two people are giving support to someone, question is, who does that person qualify for as the dependent? So if no one person contributed over half of the support of your relative or a person who lived with you all year as a member of your household, but you and another person's provided more than half of your relative support, special rules may apply that would treat you as having provided over half of the support for details C publication 501. So usually over half of the support is gonna be a condition, but what if you've got multiple people that are supporting this person, but no one one person provided over the half, you would think that someone would be claiming them as a dependent and get some kind of tax benefit related to them and for the support on that. And so you can see publication 501 in that instance finding it on the IRS website, qualifying child of more than one person. So generally, hopefully it's fairly straightforward as to whether someone is gonna be a dependent on one person or another return, but what if there's a situation where they meet all the requirements for two people, then two people can't report the same person because the IRS will bounce it back and they're not gonna give benefits to two people for the same person. So what do you do in that event? Even if a child meets the conditions to be a qualifying child of more than one person, only one person can claim the child as a qualifying child for all the following tax benefits unless the special rule for children of divorced or separated parents describe earlier applies. One, non-refundable child tax credit and credit for other dependents line 19 and refundable child tax credit or additional child tax credit. So you can't basically generally have two people claiming those huge credits for the same child generally. Two, head of household filing status. So again, if you had one child and two people that were separated you can't use the same child to push someone up or both up from single to head of household filing status. Three, credit for child and dependent care expenses. So dependent care like you got a credit for the actual cost of care that's being provided for them. You can't have two people. Four, exclusion for dependent care benefits. And five, earned income tax credit which is another huge refundable credit dependent in part on children. And so you can't basically have the same child qualifying for an income tax credit for two people. So qualified child more than one person no other person can take any of the five tax benefits just listed based on the qualifying child. If you and any other person can claim the child as a qualifying child, the following rules apply. If only one of the persons is the child's parent the child is treated as the qualifying child of the parent. So that's gonna be the tie breaker here. We're looking at if they qualify if they meet all the tests for two people but one is the parent. If the parent file a joint return together and claim the child as a qualifying child the child is treated as the qualifying child of the parents. If the parents don't file a joint return together but both parents claim the child as a qualifying child the IRS will treat the child as the qualifying child of the parent with whom the child lived for the longer period of time in 2021. If the child lived with each parent for the same amount of time the IRS will treat the child as the qualifying child of the parent who had the higher adjusted gross income. Why would that be? That doesn't seem fair you might say because you would assume the higher adjusted gross income is giving more of a support test as I believe the rationale. If no parent can claim the child as a qualifying child the child is treated as the qualifying child of the person who had the highest AGI adjusted gross income 2021. If a parent can claim the child as a qualifying child but no parent does so claim the child the child is treated as the qualifying child of the person who had the highest AGI for 2021 but only if that person's AGI is higher than the highest AGI of any parent of the child who can claim the child. Qualifying child of more than one person example. So let's look at some examples here. Your daughter meets the condition to be a qualifying child for both you and your mother. Your daughter doesn't meet the conditions to be a qualifying child of any other person including her other parent. Under the rules just described you can claim your daughter as a qualifying child for all of the five tax benefits just listed for which you otherwise qualified. Your mother can't claim any of these five tax benefits based on your daughter. Why? Because the tiebreaker was that you were the mother even though that they can qualify under both. So that's gonna be the tie breaking condition. However, if your mother's AGI is higher than yours and you do not claim your daughter as a qualifying child your daughter is the qualifying child of your mother. So why would that be important? You could have a situation where you're saying, okay, the parent is the tiebreaker. So she gets to claim the child as a qualifying child if she wants, but possibly it's not gonna give her the same kind of benefit as it was if her mother who also would be able to qualify for the dependent of her child, except for the fact of this tiebreaker rule. So you might say, well, for the benefit of everybody involved I would like to have the mother, you know, my mother, you know, qualify for the child because that would just have the higher tax benefit in total. So in that case, however, the exception here, if your mother's AGI is higher than yours and you do not claim the daughter as a qualified child, your daughter is the qualifying child of your mother. For more details, examples, so you got more examples you can find on publication 501 and some of the family structures these days, I mean, you know, family structures can get confusing. So you can think of odd family structure where the dependent, you know, dependent situation is not clear cut and you can see more examples in those instances in publication 501.