CITIZENS AND DEPENDENTS
Federal income tax rules apply to all U.S. citizens, regardless of where they live. The term U.S. citizen includes:
An individual born in the United States
An individual whose parent is a U.S. citizen
A former alien who has been naturalized as a U.S. citizen
An individual born in Puerto Rico, Guam, or the U.S. Virgin Islands (these are "U.S. possessions")
TIP: For tax purposes, the term "U.S. national" refers to individuals who were born in the US possessions of American Samoa or the Northern Mariana Islands who are not U.S. citizens. There are also special rules that apply, which we will not cover. These US possessions have their own governments and their own tax systems. Special rules exist for taxpayers that reside in U.S. possessions, but this is beyond the scope of this course. This course will focus more generally on citizens who do not reside in U.S. possessions and accordingly are required to report all income from worldwide sources on their U.S. income tax return.
TESTS FOR CLAIMING DEPENDENTS
Determining when a taxpayer is able to claim another person as a dependent is an important consideration in filing a tax return. A dependent is a person that relies on the taxpayer to provide the majority of support.
To claim a person as a dependent, must meet all three of the following tests:
Dependent Taxpayer Test – The taxpayer cannot qualify as a dependent of another person.
Joint Return Test – A taxpayer cannot claim as a dependent a married person who files a joint return, unless the married person files the return only as a claim for refund.
Citizenship or Resident Test – A dependent must be a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico, for some part of the year.
In general, a taxpayer cannot claim a person as a dependent unless they provide more than half of the total annual support and that person is a qualifying child or qualifying relative.
QUALIFYING CHILD
There are additional tests for a child to be a qualifying child, these four tests must be met:
Relationship Test – The child must be a son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant.
Age Test – To meet this test, a child must be younger than the taxpayer (or spouse if filing jointly) and meet one of the following conditions:
1. Younger than age 19 at the end of the year
2. Younger than age 24 at the end of the year and a full time student
3. Any age if permanently and totally disabled
Residency Test – Child must live with the taxpayer more than half of the year. A child who is born or dies during the year qualifies if the home was the child’s home the entire time the child was alive. A child is considered to live with a taxpayer when at the hospital following birth, or temporary absences due to special circumstances such as illness, education, business, vacation, or military service. If born alive but living for a moment (not stillborn) official documentation must prove live birth.
Support Test – The child cannot provide more than half of their own support.
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