If you're claiming an IRS dependent for the first time, it's important to know the dependent definition before you use the Personal Allowances Worksheet on your W-4. If you're looking for where to claim dependents on your W-2, you're actually looking at the wrong form. It's also important to know about the credits that are available when you claim an IRS dependent on your taxes.
In the days before the 2017 Tax Cuts and Jobs Act, taxpayers received personal exemptions totaling $4,050 per person when they claimed dependents. However, those personal exemptions have been replaced by standard deductions through 2025. Some tax credits do exist, though.
Current Dependent Tax Credits
Here's a look at what's available for tax credits for dependents:
- Child Tax Credit: Provides up to $2,000 per qualifying child under age 17.
- Additional Child Tax Credit: Provides up to $1,400 in refundable credits for each qualifying child.
- Earned Income Tax Credit: A refundable tax credit for up to three dependents.
- Child and Dependent Care Credit: A credit available for qualifying expenses for children age 13 and under.
Read More: Claiming Dependents for Your Taxes
IRS Criteria for Dependents
What is the number of dependents when you're filling out your tax forms? In the eyes of the IRS, a dependent is anyone you support to the extent that half of their total annual support came from you during the tax year involved. This means you covered food, shelter, clothing and other needs.
Typically, a dependent is a child. However, this isn't always the case. Here's a quick rundown of fast facts to help when trying to determine what is the number of dependents you should claim this year:
- A dependent must be a United States citizen, U.S. national or resident alien.
- A dependent must be related to you because they are your child, your stepchild, a foster child or other qualifying descendant.
- A dependent must have a Social Security number, Individual Taxpayer Identification number (ITIN) or Adoption Taxpayer Identification number (ATIN).
- During the tax year, a dependent must live with you for at least six months out of the year to be claimed.
- A child dependent must be below the age of 19 on Dec. 31 of the tax year you're filing for. Children between the ages of 19 and 24 may still qualify as dependents if they have status as full-time students for at least five calendar months out of the year.
- A child who is permanently disabled can qualify for dependent status at any age.
- While dependents can have their own tax returns, they cannot file a joint tax return for the year that you claim them unless it was solely to claim a refund.
- Dependents can be married.
- For tax year 2020, you can claim a dependent parent or adult relative on your taxes if their gross annual income is less than $4,300. An adult dependent must live with you for an entire year to be claimed as a dependent. You must also pay for at least half of their expenses.
Read More: Can I Claim My Nephews as Dependents?
Determining the Number of Dependents
So, how many dependents should you claim? Ultimately, you should claim all of the dependents that you're actually responsible for. There is no limit to the number of dependents the IRS allows you to claim on your tax return. However, an option like the Earned Income Tax Credit does cap you at a maximum of three dependents.
Considerations When Determining the Number of Dependents on Your Taxes
How many deductions should you claim to break even? The answer ultimately comes down to your specific tax strategy.
If you claim more deductions to withhold less from each paycheck, you will receive bigger paychecks. It's possible that you'll either end up with no refund, a smaller refund or a tax balance when tax time rolls around. If you claim fewer deductions, you'll receive smaller paychecks with the potential for a bigger refund. Taxpayers have the option to claim between zero and three deductions on Form W-4.
The final thing to consider when calculating how many people in your household fit the IRS dependent definition is something called your modified adjusted gross income (MAGI). Your MAGI determines your ability to use various tax credits related to both dependents and other areas of your life. First, you must determine your adjusted gross income (AGI).
You can do this by adding your wages, dividends, capital gains, business income, retirement distributions and any other income before subtracting all of your deductions for the year. Finally, your MAGI is determined by adding any untaxed foreign income, tax-exempt interest or non-taxable Social Security benefits to your AGI.
- If you are still unsure about who qualifies as a dependent, contact a tax adviser.
Adam Luehrs is a writer during the day and a voracious reader at night. He focuses mostly on finance writing and has a passion for real estate, credit card deals, and investing.