Taxpayers can receive credit for certain expenses, including a dependent deduction, which varies each year and reduces tax liability. The IRS has rules for what constitutes a dependent, and penalties will be imposed if a person claims a dependent who does not meet the criteria. Other relatives may also qualify for the deduction.
When it comes to income taxes, the taxpayer receives credit for certain types of expenses. Credit is often given as a fixed amount, based on what the government considers to be reasonable costs for a particular situation. A dependent deduction is generally the standard amount that the US Internal Revenue Service (IRS) allows a taxpayer to deduct from the amount owed in taxes because they have been supporting a dependent. Something similar exists in many countries, but is not necessarily called a dependent deduction.
The IRS has rules that specify what constitutes a dependent. If a person files taxes and attempts to claim a person who does not meet the IRS requirements, the deduction will be disallowed. At that time, the full amount of the dependent deduction is due, and penalties will most likely also be imposed on the amount not paid.
If there is any question as to whether or not a person qualifies as a dependent under IRS rules, it is best to check before filing taxes. The IRS requires that a qualifying child must not have been supported for more than half the year and cannot have filed a joint return with anyone. The child must also typically be the filer’s child, stepchild, or adopted child, and must live with the taxpayer.
There are additional rules, as well as regulations for other dependents who may qualify for the dependent deduction. The person does not have to be the taxpayer’s child in all cases, but may be another relative. This may include a parent, grandparent, aunt, uncle, or other relative; To be accepted, the relative must meet the IRS criteria for a qualifying dependent, which typically includes living with the taxpayer and certain other criteria.
When a taxpayer has a relative who qualifies under IRS rules, he or she can take the standard dependent deduction. The actual amount varies each year, but in 2010 it was $950 United States dollars (USD). This amount is used to reduce the taxpayer’s adjusted gross income, resulting in a lower tax liability. The amount can be adjusted for any of a number of reasons, including the age of the dependent, whether or not they are blind, and whether the person purchased a new vehicle and had to pay tax on it. Other factors may also be considered.
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