It’s a common question we hear every tax season - “My child (or dependent) is working now… are they still my dependent?”
The answer might surprise you because it’s not actually based on how much they earn.
The Big Myth: Income Determines Dependency
Most people assume that once a dependent earns “too much,” they can no longer be claimed.
That’s not true.
The IRS does not disqualify a dependent based solely on income. Instead, dependency is determined by a set of tests.
The Key Factors That Do Matter
To claim someone as a dependent, the Internal Revenue Service looks at these main criteria:
- Relationship
They must be your child, stepchild, sibling, or another qualifying relative.
- Age (for Qualifying Children)
- Under age 19, OR
- Under age 24 if a full-time student
- Residency
They must live with you for more than half the year.
- Support
They must not provide more than 50% of their own support.
Your dependent could earn:
- $5,000
- $15,000
- Even more
…and still be your dependent as long as they are not paying for more than half of their own living expenses.
When Income Does Matter
Income becomes important in two specific situations:
- Qualifying Relative Rules
If you’re claiming someone who is not a child (like a parent or older relative), they must earn below a certain income threshold (which changes yearly).
- Filing Requirements for the Dependent
Even if they’re still your dependent, they may need to file their own tax return if they earn above certain amounts.
Example Scenarios
Scenario 1: Teen with a Job
- Your 17-year-old
- Earns $12,000 working part-time.
- Lives at home
- You pay for most expenses
- They are still your dependent
Scenario 2: College Student
- Your 21-year-old full-time student
- Earns $18,000.
- You cover tuition, housing, and major costs
- They are still your dependent
Scenario 3: Self-Supporting Young Adult
- Your 22-year-old
- Earns $25,000 and pays:
- Their own rent
- Food
- Car
- Bills
- Earns $25,000 and pays:
- Likely not your dependent (they provide over 50% of their own support)
The Rule to Remember!
It’s not about how much they earn, it’s about who supports them.
You Don’t Have to Navigate This Alone
Every situation is a little different, especially when income, school, and living arrangements overlap.
Moore Paquette specializes in helping you determine who qualifies as a dependent and how to maximize your tax benefits.
Let’s talk.
Call us at: (818)845-1964 or send us a message through our website
Please keep in mind: Tax laws, eligibility requirements, and income thresholds change often, and this overview is not exhaustive. Always contact a tax preparer for advice specific to your situation.