 Income tax 2022-2023, who qualifies as your dependent introduction? Let's do some wealth preservation with some tax preparation. Most of this information comes from the Form 1040 Tax Year 2022 Instructions Lined Instructions. You can find it at the IRS website, irs.gov, irs.gov. Website check, please. Let's first take a look at the income tax formula, looking at which lines might be impacted by adding a dependent. Where's my new dependent? For example, the standard deduction may but not always be impacted if there's a change in dependence. So for example, if we had a single filer and then we added a dependent that might move the single filer up to a head of household filing status. But we want tax exempt status. But dependent often being one of the qualifications to do so. However, having a change in dependence will not always have an impact on the standard deduction. For example, if we added another child, then they're not going to move from head of household to another filing status past that point. Another area that there could be an impact as we have the dependence are going to be the tax rates, and that will usually be tied to whether or not there was a change in the filing status. So in that first support accounting instruction by clicking the link below, giving you a free month membership to all of the content on our website broken out by category further broken out by course. Each course then organized in a logical, reasonable fashion, making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems, PDF files and more like QuickBooks backup files when applicable. So once again, click the link below for a free month membership to our website and all the content on it. Scenario where we had a single filer moving up to head of household, then there might also be a change in the progressive tax rates when actually calculating the taxes. Then we could have a impact on the credits. If it says qualifying child, you could have a significant credit. And if it's not a qualifying child, you might have an other dependent credit impact. Notice that if you're thinking about like a quite a while back at this point in time of like an added exemption component, they changed that to again, I think try to simplify the tax code. So now we've got these credits that are related to them, the child tax credit and the other dependent credit. When we're thinking about credits focused here on the child tax credit, we could have a component that would be a non refundable component and a component of the credit, which would be a refundable component. If it was refundable, it can take the tax liability below zero. So you basically get a benefit, kind of a refund, but it's not really a refund. It's kind of a benefit program, even though your tax liability has been going below zero. If it's non refundable, then it can't take your tax liability below zero. So the benefit of the credit kind of stops at that point. We'll dive into those items more deeply when we get into the calculations of the credits themselves, including the child tax credit. But as you can see, as we try to work through our accounting equation, certain or different components of the equation will have impacts on other areas of the tax equation, which kind of complicates things as we move forward. So this is the form 1040. The dependence, of course, will be down here. So this is where we're going to be listing the dependence. We've got the name of the dependent social security number, the relation. If they're a qualifying child, if they are a credit for other dependence, then you've got the checkboxes. Those then will be reflected. The credit spot is on the second page of the form 1040. So on page two of the form 1040, we saw that there might be an impact on the tax calculation in terms of the tax tables. And that might be an impact due to, for example, a move from filing status such as single to head of household when we saw that scenario. And there could be an impact with regards to the child tax credit or credit for other dependence. The child tax credit typically being the larger one. So when we dive into the actual calculations of the child tax credit, then that's the thought process would be do they qualify as a dependent? When they qualify, if they qualify as a dependent, can I take the child tax credit because it's usually going to be a more beneficial one? If not, then I'm going to take the second credit, which is the other dependence credits if I can qualify for that. So now we'll just go into the introduction and then we'll go into the basically on the instructions for the form 1040 to see who qualifies for a dependent and then we'll go into the actual questionnaire to see who qualifies for a dependent. Now, a lot of times it's pretty straightforward who qualifies for a dependent. It's a child. It's a qualified child, pretty straightforward type of situation. But then there's other questions with regards to, well, if it's a qualifying child, do they qualify for the child tax credit? And that could be dependent on multiple factors such as age and whatnot. And then there could be, of course, other situations where someone isn't your child and then do they qualify for a dependent and so on and so forth. So it actually gets fairly complex and it's easiest to see and like a questionnaire type of format. In practice, oftentimes you can say, okay, this is a pretty straightforward scenario and when the scenario is not as straightforward, then of course we can go through that formal questionnaire process to figure it out. So who qualifies as your dependent? Dependents qualify in child for child tax credit and credit for other dependents. So when you're asking whether or not they qualify for the dependent, oftentimes then there's a couple of things related to that. Do they qualify for a dependent which might change a filing status with regards to pushing someone up from single to head of household? Do they qualify for the dependent and then give you a tax benefit of either the child tax credit, the bigger benefit, or the other dependence credit? That would be the next kind of set of questions. Follow the steps below to find out if a person qualifies as your dependent and to find out if your dependent qualifies you to take the child tax credit or the credit for other dependents. If you have more than four dependents, check the box under dependence on page four of form 1040 or 1040 SR and include a statement showing the information required in column one through four. So there's only limited information on the first page of the form 1040 with regards to the number of dependents. If you've got a whole bunch of them, then you might have to attack on another sheet there. Tip, the dependents you claim are those you list by name and the dependence section on form 1040, 1040 SR. So clearly if you're claiming them as a dependent, if you're putting something on the tax return for a child tax credit or other dependent credit, then it should be reflected on page one and the IRS is going to want to know the name and the number. Note that if there's any kind of custody issues and that's where things get kind of in the gray area for a dependent, for example, you can't have two people claiming the dependent because that would be kind of like double dipping on the benefits of basically the dependent and the IRS will be able to pick that up. Typically just without even like an intensive audit usually just with their computer system because the IRS will have the name and the social security number of the dependent. So if two people claim them, then that's going to cause problems on the IRS side of things and sometimes you won't even be able to file the return if you're trying to electronically file and someone else had already claimed them as a dependent using the name and social security number, for example. So those are going to be important components. Before you begin, see the definition of social security number later. So obviously we can get into who has a social security number versus the TIN number and entering that into the system. If you want to claim the child tax credit or the credit for other dependents, you and your spouse of filing jointly must have an SSN social security number or ITIN issued on or before the due date of your 2022 return including extensions. If an ITIN is applied for on or before the due date of a 2022 return including extensions and the IRS issues an ITIN as a result of the application, the IRS will consider the ITIN as issued on or before the due date of the return. So next time we'll get into basically the questionnaire and a more formal kind of question and answer process to determine if someone qualifies as a dependent and if so, then can you get the child tax credit, the better of the two credits and if not, can you still get the dependent credit for the dependent?