Jan 22, 2008

Other dependent requirements? Did you know...

Often some people get fooled by two additional requirements needed for taking a dependent deduction. The IRS cites them in their publications but rarely does anyone read this fine print.

There are two added rules:

1. The dependent must be a US citizen or national, or a resident of a contiguous country: Mexico or Canada. There are exceptions for adopted children, but generally US citizens are adopting and they will get the appropriate citizenship.
2. The person must not be married and file a joint return with another person. This can often happen when Mom and Dad keep a young daughter home when her husband is in a work status or school status somewhere. I cannot find any data on this, but I beleive many of our armed service personnel have their wives staying with family. This family, if all other tests are met, should be able to deduct their family guest, who they are supporting, as a dependent. There is an exception to this also- if a joint return is only as a claim for refund and no tax liability would exist for either spouse if they had filed separate returns- it is OK. Again, I have military personnel in mind for this exception.

In any event, a competent tax professional is required to maze through these rules.

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