Two Reasons The IRS Will Reject Your Adult Dependant Claim

Posted on: 13 November 2018

Contrary to popular belief, you can claim adults as dependants on your taxes and take advantage of the appropriate credits to reduce your tax liability. To prevent fraud, though, the Internal Revenue Service (IRS) limits who qualifies for this designation and will reject tax returns that include people who don't fit the requirements. Here are two reasons your tax return may run afoul of the tax agency and how to avoid this.

Your Relationship with the Defendant Violates the Law

To claim adults as dependants on your taxes, you must be related to them in a way that's acceptable to the IRS. Siblings (biological and step), parents, aunts, uncles, and in-laws are all eligible as well as their (and your) descendants (e.g. nieces, nephews), and you can claim these people even if they live apart from you.

You can also claim unrelated people as adult dependants if they live with you for the majority of the year, but your relationship with that person must be legal. You cannot claim an undocumented individual, for instance, nor would you be able to claim someone who is married if your relationship with that person qualifies as a common law marriage because it would likely violate bigamy laws.

It's essential you consult with an accountant or tax preparer if you're unsure how to categorize your relationship with the person you want to claim. It's better to spend a little money upfront confirming that the individual qualifies than risk being penalized by the IRS later.

You Didn't Provide Enough Monetary Support

Another reason the IRS may consider your adult dependant claim invalid is if you didn't provide enough monetary support for the person throughout the year he or she lived with you. To qualify as a dependant, you must have provided over half of the financial resources required to support him or her.

This only becomes an issue when there is more than one person contributing to the individual's care. Multiple siblings paying for a disabled parent's needs, for instance, can quickly lead to a situation where no one reaches the minimum threshold. Likewise, you may run into a problem if some of the individual's needs are being taken care of by social programs, such as Medicaid or welfare.

Be sure to document any monies you pay for the person's care to help you accurately calculate just how much you're contributing. You'll need to provide this evidence to the IRS if the agency questions your claims at some point.

For help with this issue or other tax problems, contact an accountant or tax preparer that specializes in 1040 tax preparation for individuals