 Income tax 2021-2022. Who qualifies as your dependent? Get ready to get refunds to the max, diving in to income tax 2021-2022. Most of this information can be found on the Form 1040 Instructions Tax Year 2021 found on the IRS website, irs.gov. Remember the strategy when we're thinking about dependence here is going to be that we want to know the general rules. Usually it's fairly straightforward if someone is going to be a dependent or not. And then we want to look for those kind of gray areas, the areas where it's not quite so clear possibly there's custody issues, age area issues, someone's a student or something like that. Then we want to research the more complex areas and we can most likely be able to start that research by going to the irs.gov website and looking at the Form 1040 instructions going from that point forward. Importance of dependence now that the exemptions are gone. So it used to be that if you had a dependent there was a line item which was kind of acted kind of like a deduction which was an exemption which has been gone for a couple of years at this point in time. So you might say, well, if that exemption is gone what's going to be the benefit of the dependence? So it could possibly if it's a qualifying child you might have a child tax credit which is a huge component to it. The credit for other dependence which is one of the kind of changes or compensations in the event that there wasn't a child instead of having an exemption you've got basically this credit which was kind of one of the replacements in essence to accommodate the exemption being gone. Earned income tax credit could be something that would be applicable or affected by a dependent and the filing status of the head of household could possibly be something that you would qualify for due to in part having a dependent if you're single or in other words in the bucket of not married then possibly being able to file head of household. So when we're thinking about the dependence the line items that would then be affected possibly the standard deduction if you're talking about a situation where you're going from single to head of household because that can have an impact on the standard deduction and then you could have an impact on the tax rates because the tax rates will be dependent in part on the filing status that we have going up from single to head of household possibly due to a dependent although that's kind of a special type of situation where you have one dependent that might be one of the qualifying factors and then the tax credits and other taxes which could be applicable so that's gonna be the big item that's probably the first thing that comes to mind when you think about a dependent because the first thing you probably visualize is a dependent child and if it's a dependent child you got the huge possible child tax credit and the advanced credits and so on related to it not a child if not a child then you might still have the other dependent credit that would be involved here so those are the things that would kind of come to mind when you're thinking about dependence in terms of what's gonna be the impact on the actual taxes on the income tax equation and then the refundable credits of course is also gonna be effected because we're talking about the child tax credit which could have a refundable component it also could affect the earned income tax credit which could have a refundable component to it as well so we're looking at the dependence area which is going to be down here where we would be adding in essence the dependence that's where you would actually see them this is the first page on the tax return and then we could have an impact online item such as the non-refundable child tax credit and other credits basically these are gonna be the main areas this is the non-refundable child tax credit and other dependence from schedule 8812 I think the whole child tax credit is that in essence refundable at this point for this year so and that means that it will take your tax liability beyond zero you could still get in essence kind of like a refund even though your tax liability is below zero so it's gonna impact the refundable credits as well usually the determination of if someone is a dependent or not is fairly straightforward and we will be going through a questionnaire that is actually in the instructions in the form 1040 in a future presentation here we're gonna address some of more of those gray type of areas where there's like a joint custody type of situation and just give some ideas on where you can look for those items again if there's questions on these kind of gray areas as to whether someone qualifies as a dependent or not you possibly want to start at the form 1040 instructions and continue on with your research from there so children of divorced or separate parents this is one of those kind of conditions which is quite common where you have some kind of joint custody type of situation and the question is well who's gonna qualify or who's gonna be claiming the dependent and these are types of situations where when you have a separation type of agreement or custody type of agreement you would hope that they address this in the agreement and usually they do but with everything else going on sometimes it's not quite as clear as it could be and you'd like to make sure that you make it as clear as possible if possible so that you don't run into headaches in the future with these kind of things because they can be significant so a child will be treated as a qualified child or qualified relative of his or her non custodial parent defined later if all the following conditions apply one the parents are divorced legally separated supported under a written separation agreement or lived apart at all times during the last six months of 2021 whether or not they are or were married two the child received over half of his or her support in 2021 from the parents and the rules on multiple support agreements later don't apply so they got these multiple support agreements which again it's another kind of gray area that you'd have to dive into if it applies to you support of a child received from a parent's spouse is treated as provided by the parent three the child is in custody of one or both of the parents for more than half of 2021 four either of the following applies A the custodial parents signs form 8332 or a substantially similar statement that he or she won't claim the child as dependent for 2021 and the non custodial parent includes a copy of the form or statement with his or her return in the event that the non custodial parent is the one claiming if the divorce decree or separation agreement went into effect after 1984 and before 2009, the non custodial parent may be able to include certain pages from the decree or agreement instead of form 8332 see post 1984 and pre 2009 decree or agreement and post 2008 decree or agreement B a pre 1985 decree or divorce of separate maintenance or written separation agreement between the parents provides that the non custodial parent can claim the child as dependent and the non custodial parent provides at least $600 for support of the child during 2021. If conditions one through four apply only the non custodial parent can claim the child for purposes of the child tax credits and credits for other dependence lines 19 through 28. So clearly the IRS is gonna try to clear up these basically in between areas and say which parent can claim. Note that if you have one parent claiming and if both parents feel that they can claim the dependent what's gonna happen is most likely the first parent that files is gonna claim the dependent it's gonna go through the second parents not gonna be able to because the social security numbers gonna bounce back and then you've got to unwind this whole kind of problem with it to see who actually can claim and then straighten it out with the IRS and so on and so forth. So however, this doesn't allow the non custodial parent to claim head of household filing status the credit for child and dependent care expenses the exclusion for dependent care benefits the earned income credit or the health coverage tax credit the custodial parent or another taxpayer if eligible can claim the child for the earned income tax credits and these other benefits. So if this is applying to you you wanna do some more research on this it's in publication 501 for more details you can find that on the IRS website irs.gov irs.gov custodial and non custodial parents the custodial parent is the parent with whom the child lived for the greater number of nine since 2021. And usually that's gonna be one of the conditions that they lived there for a greater portion of the year. So you would think between the two parents the one that the child is living with more would typically be the one more usually you would have them filing or being claimed as the custodial parent unless there's an exception to the rule. So the non custodial parent is the other parent if the child was with each parent for an equal number of nights the custodial parent is the parent with a higher adjusted gross income. So you can see in essence it looks like it's basically defaulting here in terms of if you're saying to who should be claiming the child rule number you usually it would be like the custodial parent. And then number two if that if it was an even which is often gonna be kind of the case at least in this arrangement or setup where you have an even nights for one and the other then you're gonna go to the income test the custodial parent is the parent with a higher adjusted gross income assuming that that's the one that's doing the support in that instance. See publication 501. You can find that on the IRS website for an exception for a parent who works at night rules for a child who is emancipated under state law and other details.